Most Read Contributor in South Africa, September 2016
The Forum on Tax Administration ('FTA'), comprising the
heads of tax administrations from 45 economies, met in Moscow for
the 8th meeting of the FTA. The final communiqué
issued pursuant to the Moscow meeting indicated that the FTA is
dedicated to securing high levels of voluntary tax compliance by
providing excellent service and effectively addressing tax evasion
and aggressive tax avoidance in all its forms, including the
The communiqué indicated that the participating tax
administrations are committed to undertaking action jointly to
improve the effectiveness of tax administrations, address
trans-national tax fraud, tax evasion and aggressive tax
The Moscow communiqué pointed out that, where the tax
administrations are detecting offshore evasion, they will share
information with their partner countries. It was pointed out
that tools have been developed to enhance the gathering of
information and cross-border financial transfers, to understand
banking transactions and to identify the beneficial owners of
complex structures. Furthermore, Australia, the United
Kingdom and the United States of America have secured significant
data revealing complex offshore structures, which will be utilised
by the revenue authorities in those countries to identify
participants in tax evasion and take action against those persons
where necessary. It would appear that the three countries
concerned will share the information obtained by them to other
members of the FTA in accordance with international agreements.
Over the last few years, the number of agreements allowing for
the exchange of information between countries has increased, and
this has facilitated the greater flow of tax information between
states. The FTA has indicated that it will rely more and more
on the provisions of the increased network of agreements, allowing
for the exchange of information and, also, by providing necessary
training to tax auditors to ensure the effective and secure use of
information received under the various international
agreements. It must be noted that the automatic exchange of
information between states has increased, and that this will
ultimately become the standard to which various countries will
comply under international agreements.
The Moscow communiqué also referred to the OECD's
work on Base Erosion and Profit Shifting ('BEPS'), which
will initiate an action plan intended to modernise international
tax instruments and standards to counter BEPS, particularly in the
area of international taxation, transfer pricing and the digital
economy, in an effective manner. Governments around the world
are concerned about the erosion of their tax base and shifting of
profits to lower tax jurisdictions, particularly in the current
economic climate, which has created difficulties for tax
authorities collecting sufficient tax for the various governments
around the world.
In addition, the communiqué indicates that tax
administrations must enhance their efficiency and offer their
citizens and businesses quality service and support for voluntary
compliance. It was pointed out that the effective management
of tax debts, including tax debts that arise cross-border, is a key
priority, and will be a particular focus of attention in the
When reference is made to the various initiatives underway, such
as the OECD's BEPS initiative, the work of the FTA and other
organisations, it is important that businesses review the manner in
which they conduct their tax affairs to ensure that they comply
with their fiscal obligations in the various countries within which
All revenue administrations need also to take account of the
rights which taxpayers have in their dealings with the revenue
authority, and South African taxpayers can seek reliance on the
Constitution of the Republic of South Africa, Act 108 of 1996, in
ensuring that their rights are not violated by SARS. Various
organisations have undertaken research into the design of a model
taxpayers' charter to prescribe levels of taxpayers' rights
to protect taxpayers in their dealings with tax administrations
around the world.
It is important, taking account of the pressures facing revenue
authorities to raise revenue in difficult economic times, that
taxpayers' rights are protected, and are not disregarded when
collecting tax that the revenue authorities believe may be due.
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guide to the subject matter. Specialist advice should be sought
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Effective collaboration amongst government agencies, automation of processes and capacity building by tax authorities have always been identified by stakeholders as strategies for achieving an efficient tax system.
In response to information provided by FIRS, NSE has sent letters to publicly listed companies, who were purportedly identified by FIRS as non-compliant.
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