South Africa

Intergovernmental agreements (IGAs)

South Africa entered into an agreement with the United States to improve international tax compliance and to implement the Foreign Account Tax Compliance Act (FATCA). The date of entry into force was 28 October 2014.

South Africa is also a party to the Multilateral Convention on Mutual Administrative Assistance on Tax Matters as well as a number of bilateral tax information exchange agreements. As a signatory to the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information, also referred to as the Common Reporting Standard (CRS), South Africa enacted domestic enabling legislation. The first exchange date was September 2017. South Africa also has bilateral CRS agreements with Hong Kong, Qatar, and Singapore.

South Africa has also entered into a number of Bilateral Country-by-Country (CbC) Competent Authority Agreements to exchange CbC reports.

Base Erosion and Profit shifting (BEPS)

South Africa is a member of the OECD’s Inclusive Framework on BEPS and has been amongst the first adopters of BEPS Actions in general. Notably, South Africa:

• was amongst the first batch of signatories to the Multilateral Instrument (MLI) in June 2017 (South Africa ratified the MLI in 2022), and
• enacted (in 2016 and 2017) domestic regulations to enact transfer pricing documentation requirements aligned with Chapter V of the OECD’s 2017 Transfer Pricing Guidelines (also referred to as BEPS Action 13), including the exchange of CbC reports.

The legislation to implement Pillar Two is contained in the 2024 Taxation Laws Amendment Bill (expected to be promulgated at the end of December 2024) and proposes to introduce two measures to effect the Pillar Two proposals, namely an Income Inclusion Rule (IIR) and a Domestic Minimum Top-Up Tax for Qualifying Multinationals (QDMTT) for years of assessment commencing on or after 1 January 2024.

Common Reporting Standard (CRS)

On 9 October 2020, updated CRS regulations were published in the Government Gazette. These regulations replace earlier regulations from 2016 and introduce mandatory disclosure rules and administrative procedures in relation thereto.

The mandatory disclosure rules introduced ensure access to information on CRS Avoidance Arrangements and Opaque Offshore Structures for purposes of ensuring compliance with the CRS and the effective implementation of the anti-avoidance rules.

Broadly, the rules follow the OECD’s model mandatory disclosure rules to identify and counter offshore structures and arrangements that are designed in an attempt to circumvent financial account reporting under the CRS.

Although the definitional portions of the rules are effective from 1 June 2021, an intermediary’s obligation to disclose a CRS Avoidance Arrangement or Opaque Offshore Structures to the SARS comes into effect on 1 March 2024.

Mandatory Disclosure Rules

The Tax Administration Act provides for the mandatory reporting of certain arrangements by persons who derive tax benefits or financial benefits from such arrangements, are promoters of the arrangement, or are parties to the arrangement.

Broadly, there are two types of reportable arrangement:

• those containing certain hallmarks and where the tax benefit exceeds ZAR 5 million, and
• arrangements that have been listed as reportable arrangements in a public notice.

If an arrangement is a reportable arrangement, it is required to be reported by a person to the SARS within 45 business days of it becoming a reportable arrangement or of the person becoming a participant in the reportable arrangement. A person need not disclose the reportable arrangement if a written statement is obtained from another participant that the reportable arrangement has been disclosed.

Crypto Asset Reporting Framework

In November 2023, South Africa joined 47 other countries in agreeing to adopt the Crypto-Asset Reporting Framework.

Exchange control

South Africa has exchange control regulations that aim to restrict the buying and selling of a national currency or to preserve foreign currency reserves.