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Amended Convention on Mutual Administrative Assistance in tax matters
On 21 February 2014 the amended Convention on Mutual Administrative Assistance in Tax Matters was published, taking effect on 1 March 2014. Taxand South Africa provides an overview of the recent amendments.
64 Countries have signed either the original Convention or the amended Convention, the purpose of which is to increase the co-operation amongst tax authorities around the world and to combat tax avoidance and tax evasion on an international level.
South Africa has elected that the Convention will apply to the following taxes:
- income tax
- withholding tax on royalties
- tax on foreign entertainers and sportspersons
- turnover tax on microbusinesses
- dividends tax
- withholding tax on interest, effective from 1 March 2015
- capital gains tax
- estate duty
- donations tax
- transfer duty
- excise tax
- securities transfer tax
The coming into force of the Convention must be viewed in the light of the work of the Global Forum and the intention to ensure that tax information will be exchanged automatically. On 12 October 2013 it was announced that South Africa would join the pilot scheme for the automatic exchange of tax information launched by the UK, along with France, Germany, Italy and Spain. This move flows from a decision taken by the G20 countries to enhance transparency and exchange of tax information to benefit both developed and developing countries. On 13 February 2014 a common reporting standard for the automatic exchange of information between tax authorities was unveiled. The standard requires jurisdictions to obtain information from their domestic financial institutions and to exchange that information automatically with other tax jurisdictions on an annual basis.
Also published in Thomson Reuters' Taxnet Pro, 28 May 2014
Taking account of developments in the international arena, those taxpayers whose tax affairs are not in order should seek to regularise their position under the Voluntary Disclosure Programme available under the Tax Administration Act, failing which such persons are likely to be identified by the South African Revenue Service as a result of the international initiatives under way to enhance tax compliance.