The Organisation for Economic Co-Operation and Development (OECD) developed the Standard for the Automatic Exchange of Financial Account Information in Tax Matters. The Standard encompasses the Common Reporting Standard (CRS).

Reporting Financial Institutions in participating jurisdictions are required to determine and report on financial account information of foreign tax residents to the financial institutions' local Tax Authority. Such information is then automatically exchanged annually between jurisdictions where there is a treaty and a basis for such exchange (or retained by the local Tax Authority in the absence of a legal basis for exchange).

On 9 October 2020, the South African Minister of Finance, Tito Mboweni, gazetted new regulations (reflecting changes to the CRS) required to enable South Africa to comply with its treaty obligations. These new regulations will repeal the 2 March 2016 regulations (that gives effect to the CRS in South Africa).

The new regulations are expected to come into effect from 1 June 2021.

The regulations contain 11 sections that address the following matters:

1. General Reporting Requirements
2. General Due Diligence Requirements
3. Due Diligence for Pre-existing Individual Accounts
4. Due Diligence for New Individual Accounts
5. Due Diligence for Pre-existing Entity Accounts
6. Due Diligence for New Entity Accounts
7. Special Due Diligence Rules
8. Defined Terms
9. Complementary Reporting and Due Diligence Rules for Financial Account Information
10. Effective Implementation
11. Mandatory Disclosure Rules

Paragraph B of Section XI (Mandatory Disclosure Rules), inter alia, gives effect to an intermediary's obligation to disclose a CRS Avoidance Arrangement or Opaque Offshore Structures to the South African Revenue Service and will come into effect on 1 March 2023.

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CONTACTS

For additional information with respect to this Alert, please contact the following:

Ernst & Young Advisory Services (Pty) Ltd., Johannesburg

• Stefan Botha
  stefan.botha@za.ey.com
• Wendy Gardner
  wendy.gardner@za.ey.com

Ernst & Young Advisory Services (Pty) Ltd., Cape Town

• Ide Louw
  ide.louw@za.ey.com

Ernst & Young Advisory Services (Pty) Ltd., Durban

• Candice van den Berg
  candice.vandenberg@za.ey.com

Ernst & Young Société d'Avocats, Pan African Tax – Transfer Pricing Desk, Paris

• Bruno Messerschmitt
  bruno.messerschmitt@ey-avocats.com
• Alexis Popov
  alexis.popov@ey-avocats.com

Ernst & Young LLP (United Kingdom), Pan African Tax Desk, London

• Byron Thomas
  bthomas4@uk.ey.com

Ernst & Young LLP (United States), Pan African Tax Desk, New York

• Brigitte F Keirby-Smith
  brigitte.f.keirby-smith1@ey.com
• Dele Olagun-Samuel
  dele.olaogun@ey.com

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ATTACHMENT

PDF version of this Tax Alert