close menu

Nowhere to run: South African tax payers and the Common Reporting Standard

by Niel Pretorius | May 04, 2017
  • Martha & the Vandellas’ hit released 40 years ago seems more apt than ever. A government keen on increasing tax revenues at all costs and new international agreements between tax authorities across the world mean that if you are a wealthy South African you could find your international assets being taxed like never before. Before we explain what could be taxed, let’s take a look at how we got to this point.

    It began with the Davis Tax Committee

    In 2013, during his first stint as South African Minister of Finance, Pravin Gordhan established the Davis Tax Committee (DTC) to inquire into the role of the tax system in the promotion of inclusive economic growth, employment creation, development and fiscal sustainability.

    The committee was instructed to consider recent domestic and international developments and, particularly, the long-term objectives of the government’s National Development Plan. The DTC was specifically requested by the Minister to inquire as to whether it would be appropriate to introduce additional forms of wealth taxation and the feasibility of doing so.

    What taxes are being considered by the DTC ?

    The DTC invited submissions by 31 May 2017 on the desirability and feasibility of the following possible forms of wealth tax:

    1. A land tax
    2. A national tax on the value of property (over and above municipal rates)
    3. An annual wealth tax

    Presently, it seems the state is broke and is looking to generate revenue in every possible place. We’ve already seen the 2017 budget speech propose the taxation on foreign employment income where the employee is not taxed in such foreign country. Now, whether it would consider the cost of living in most of those countries, and that the majority of people would be forced to leave if they had to give up 45% of their overseas income, remains to be seen. What we can infer from this, however, is that no income is off the tax table.

    Changes in the taxation to pensions funded from abroad has already taken effect and those who had funded these for years and hoped to receive the benefits tax-free have been dealt a nasty blow.

    Introducing a wealth tax may well be the next step, and, given the fact that South Africans pay tax on our worldwide income, foreign assets may become subject to a general wealth tax.

    Beyond all this, however, there is another, more insidious change taking place which should make South Africans with foreign investments very nervous – and it’s all got to do with the Common Reporting Standard (CRS).

    What is the CRS?

    The CRS is formally known as the Standard for Automatic Exchange of Financial Account Information. It is a legal framework created by the OECD, with the close cooperation of the G20 and the EU. Essentially, it requires financial institutions to report information (to the appropriate tax authorities), about financial assets held on behalf of tax payers, from jurisdictions with which their tax authority exchanges information. This information is shared automatically each year.

    Following on from implementation of the Foreign Account Tax Compliance Act (FATCA) in 2010 in the United States, the OECD has, in response to a request from the G20, pushed the CRS since 2014. There are now 101 jurisdictions in agreement to start automatically exchanging information by 2018.

    Why CRS matters to South Africans with foreign assets

    CRS is a gamechanger and investors must pay attention.

    An investor with assets outside the country where he or she is resident, should be aware that the financial institutions will give their personal account information to the local tax authority, which may then be shared automatically on an annual basis with the tax authority where he or she is a tax resident. That tax payer’s individual accounts, as well as dividends, interest and other incomes earned outside their country of tax residence, will thus be under investigation.

    Thinking of flying under the radar? CRS is not just about the big fish

    With revelations of offshore assets (for whatever reason) the perception is of non-compliance which comes with the potential for reputational damage. People may assume that it is the high profile, large impact clients who are being targeted, but the average person should not assume they will fly under the radar.

    CRS will allow SARS to collect taxes more efficiently and we may see significant tax revenues generated once the first reporting period ends. South Africa has a large budget deficit and under CRS, the South African Revenue Services (SARS) will have access to an unprecedented volume of information on South African tax residents’ offshore dealings and their offshore structures.

    Expect the taxman to come down hard on foreign assets as he tries to fill the budget deficit gap.

    The taxman’s not the only one after your money

    In an age where cybercrime is rampant, your information will be held by governments in digital format. This will include your full details, the account details, balances, trades, your tax number and more. A hacker or dodgy government employee’s dream.

    I expect to see the number of fraud attempts on these accounts to increase. Especially since these are often very cleverly disguised with financial institutions regularly fooled by such attempts.

    What you need to do

    It’s time to review your affairs and understand clearly from your adviser what the potential effects on you may be in the event of loss, and what measures are in place to ensure you are protected.

    Don’t stick your head in the sand. It’s best to get ahead of potential problems before they cause undue stress. Send an email to, or give us a call on +27 (0) 21 657 1578 or +44 (0) 20 7759 7519 and we’ll help you figure out your best course of action.

    We are a professional services company that specialises in cross-border financial and immigration advice and solutions.

    Our teams in the UK, South Africa and Australia can ensure that when you decide to move overseas, invest offshore or expand your business internationally, you’ll do so with the backing of experienced local experts.

    • Hand depositing coin depicting Pound symbol into house-shaped piggy bank
      Should you remortgage or consider a product transfer?
      Sep 23, 2019  |  by Neil Ambrose
    • Town- houses
      How Shari’ah (Islamic) mortgages work
      Sep 06, 2019  |  by Ian Henning
    • Home Model
      4 things first-time homebuyers should do
      Aug 20, 2019  |  by Neil Ambrose
    • Property with price tage
      It’s a great time to buy your first UK property – here’s why
      Jun 03, 2019  |  by Marlon Borez
    • Handing over house keys
      Contractor mortgages: What you need to know for a successful application
      May 31, 2019  |  by Ian Henning
    • House rent protection
      Rental guarantees: What lenders think about rent protection schemes
      Apr 24, 2019  |  by Bill Monty
    • blended-families
      How “yours, mine and ours” complicates the estate planning process: Advice for blended families
      Apr 17, 2019  |  by Sherron Alexander-Bedingfield
    • Mortgage Concept
      The perfect time to secure a better interest rate on your remortgage
      Apr 03, 2019  |  by Ian Henning
    • growing tree
      The boom behind ESG investing – what’s actually driving the demand
      Mar 26, 2019  |  by Mike Abbott
    • Lightbulb working
      South Africa’s Retail Distribution Review – slow but important changes for investors and advisors
      Mar 05, 2019  |  by Mike Abbott

    South Africa

    Cape Town

    Regent Square
    Doncaster Road
    Kenilworth 7708 +27 (0) 21 657 2120


    25 Richefond Circle
    Umhlanga 4320 +27 (0) 31 536 8843

    United Kingdom


    One Croydon
    12-16 Addiscombe Road
    Croydon CR0 0XT +44 (0) 20 7759 7514



    9 Yarra Street
    South Yarra
    VIC 3141 +613 (0) 8651 4500

    Sable International is a trading name of 1st Contact Money Limited (company number 07070528), registered in England and Wales. We are authorised and regulated by the Financial Conduct Authority in the UK (FCA no. 517570), the Financial Services Conduct Authority in South Africa (1st Contact Money [PTY] Ltd - FSP no. 41900) and hold an Australian Financial Services Licence issued by ASIC to deal in foreign exchange (1st Contact Group - AFS Licence number 335 126).

    We use cookies to provide the best website experience for you. Using this website means that you agree to this. How we use cookies.