Relinquishing Our Grey Throne
South Africa was placed on the ‘grey list’ by the Financial Action Task Force (FATF) on 24 February 2023 for not adhering to international norms to prevent money laundering, terrorist financing, and proliferation financing.
Finance Minister Enoch Godongwana emphasised in his medium-term budget policy statement that numerous government departments and agencies were working to rectify shortcomings identified by FATF. These include the South African Revenue Service (SARS), the National Prosecuting Authority, and the Hawks, who are all actively engaged in addressing these issues. While there is still a “considerable” amount of work to be accomplished, the government anticipates rectifying all the issues pointed out by the FATF by the beginning of 2025.
The Dreaded Grey List
The recently proposed Tax Administration Laws Amendment Bill aims to empower SARS to share confidential taxpayer information with three additional key government bodies. This initiative has been dubbed as a “collaborative information-sharing effort” and has the goal of providing support to:
| The Master of the High Court |
| The Companies and Intellectual Properties Commission (CIPC) |
| The Directorate for Non-Profit Organisations. |
Improving Our Standing
SARS continues to uphold its unwavering dedication to protect taxpayer confidentiality. As Section 70 of the Tax Administration Act outlines, it has clear guidelines on the entities it may share taxpayer information with and under what circumstances this may be done. It is within this section that the proposed amendment has been introduced.
The change aims to broaden the scope of information sharing, thereby enhancing the depth and breadth of financial transparency within the country. This move supports domestic efforts for enhanced financial transparency and places South Africa aligned with international practice, strengthening its position in the global economic community.
The Intention of Increased Scrutiny
The proposed revision to the Tax Administration Act and amendments to the Companies Act and the Trust Property Control Act should positively impact our standing on the FATF greylisting. Expanding this list aims to identify the beneficial owners of companies, trusts, and non-profit organisations. This will enable a more accurate determination of income tax liabilities and assist in investigations related to suspicions of money laundering and other illicit activities.