After a long investigation of the names of South Africans implicated in the so-called Panama Papers, the South African Revenue Service (SARS) announced it has identified the names of the 1,700 individual South African residents and would be matching the individuals with its data base.
The leaked panama papers had on it, a record of wealthy Latin Americans who use secretive, tax-free New Zealand shelf companies and trusts to help channel funds around the world. It showed how world leaders, business people and celebrities have been hiding their money in offshore tax shelters.
In its investigation, SARS reveals that south Africans mentioned range from shareholders and directors to beneficiaries.
So far, 56 South African intermediaries had been identified, SARS group executive for product oversight, legal and policy, Vlok Springton, said in a presentation to a joint meeting of three parliamentary committees on Wednesday to discuss the Panama Papers.
79 of a total 560 offshore entities have been matched to 81 South African residents as SARS moves on to match the identities of these individuals with its database and testing the Panama data against the income tax declarations of the South African residents.
Springton said it was too early to predict the level of tax avoidance or evasion and cautioned that the processes of profiling and enforcement were lengthy by nature.
“The data available to SARS with respect to the Panama Papers is a useful starting point for further enquiry but will require substantial follow-up work”.
The international consortium of investigative journalists which released the Panama Papers has however, refused to release its database of information which include 11.5-million internal files obtained from Panamanian law firm Mossack Fonseca.
SARS participated in a special meeting of the Joint International Tax Shelter Information and Collaboration Network on the Panama Papers in April and an international action plan was agreed on to gather more information and sharing it efficiently among tax administrators.
“International co-operation will intensify once a better understanding of the Panama data becomes available,” Springton said adding that transfer pricing audits in the 2015-16 fiscal year had yielded R721m from the mining and quarrying industry, R95m in the oil refinery sector and R43m from manufacturing.
At the time of the release of the panama papers, President Zuma’s nephew Khulubuse Zuma‘s name surfaced due to his ties to a company which scored a multi-billion rand oil deal in the Democratic Republic of the Congo and his spokesman Vuyo Mkhize, said it’s no secret that the businessman is associated to Caprikat Limited, which is registered in the British Virgin Islands.
Meanwhile, Reserve Bank’s head of financial surveillance Elijah Mazibuko told MPs from the finance, trade and industry and mineral resources committees that from January 2015 to date, about 145 bank accounts with about R307m were frozen for suspicious illicit financial flows.
He further noted that there had been a “dramatic” increase in the number of referrals of suspect transactions and total of 77 new investigations were opened during this period and a number of arrests were made.
Mazibuko said was legal for South African residents to invest up to R10m plus R1m a year offshore, and corporate up to R1bn without prior reference to the financial surveillance department of the Reserve Bank.