In March 2016, the global version of the United States’ Foreign Account Tax Compliance Act (FATCA), also known as the Common Reporting Standard (CRS), will come into effect in South Africa. Both FATCA and CRS affect individuals, entities and financial institutions globally.
In essence, FATCA aims to combat US offshore tax evasion and recoup US tax revenues. It requires non-US financial institutions to provide the US Internal Revenue Service (IRS) with information relating to its clients who are US citizens (in South Africa this information flow is facilitated via SARS). Building on FATCA, CRS is the global standard for automatic exchange of financial account information and extends to all foreign-held accounts and not only those of US citizens.
To adhere to these international reporting requirements, South African financial institutions must collect information and report to SARS on its clients:
- That are US citizens or tax residents, or
- That are non-South African tax residents, or
- South African tax residents that have US and other foreign details recorded on our systems
These details include:
- Citizenship
- Physical/residential addresses
- Place of birth
- Postal address
- Controlling persons and relationships
- Power of attorney
- Phone numbers
- Care of address
The information reported to SARS would include the above indicators as well as additional information such as:
- Financial accounts for example bank accounts or stock broking accounts
- Balances and payments into/out of the accounts
SARS then shares this information with relevant global tax authorities who in turn share reciprocal information with SARS on South Africans who hold financial accounts outside South Africa. This could result in additional investigations by SARS.
If all your tax affairs are in order, FATCA and CRS will have a minimal impact on you, other than the requirements for you to provide additional information to Investec.
Please contact your tax adviser if you have any questions or uncertainties about your tax obligations. You can also obtain more information from the SARS website.