Welcome to the second edition of our Private Client tax publication, Personal Perspectives. Tax compliance continues to be on the top agenda for both government and corporate's. Tax payers and civil society are asking the right questions in terms of stakeholder accountability on proper tax expenditure.
Although families are generally not prepared to ‘corporatise’ how they manage their family enterprises and wealth, there is a trend to ‘professionalise’ their approach in this regard. The key objective of this is to protect both the
family business and the family wealth from the ‘normal, yet unpredictable, challenges’ that family involvement brings. Accordingly, what do those charged with governance, of the family wealth and the associated family enterprises, need to consider with regard to the recent regulatory changes?
The global automatic exchange of financial information between tax jurisdictions (commonly known as the Common Reporting Standard (“CRS”) means that detailed financial information would automatically be shared between jurisdictions on an annual basis as from September 2017, i.e. right after the closing of the SVDP window.
The CRS will assist governments to reduce the possibility for tax evasion by providing for the exchange of non-resident information with the tax authority in the taxpayer’s country of residence.
Comments from SVDP specialists at the start of 2017 opined that the SVDP might yield less than expected. It was mentioned that High Net Worth Individuals (“HNWI’s”) were reluctant to disclose their offshore assets because “… people are suspicious about coming clean and concerned about the expensive nature of the programme.” The
expectation that the SVDP would raise between R10 billion and R15 billion was said to be mere conjecture.
Among a variety of conversations, the topics that took precedence at the KPMG South Africa Roundtable on 04 July 2017 were ones that are important to the ordinary citizen as well as business: what makes tax a fundamental part of the functioning of society, the role of government in the tax system as well as whether or not there is transparency in tax.
The theme of the round table was: “Why is Responsible Tax in a developing economy so crucial for stability, infrastructure projects and social inclusion? What is the responsible approach for taxes and taxation to enable the
developing world to flourish?”
There was a clear and unanimous feeling that, especially in South Africa, business and citizens believe that they are being overtaxed. During the 1990s the amount of tax collected increased as the economy grew but this is
now in reversal. The economy has stagnated but people see the number of civil servants and the bureaucracy increasing. Government’s response appears to be introducing more and more taxes - sugar tax, plastic bag tax and potentially a wealth tax - or increasing the personal tax rates but people are not seeing the benefit.
We hope you enjoy this edition of Personal Perspectives. As always, if you have any comments, feedback or suggestions of what you would like us to cover in future issues, please do get in touch.
Head of Tax Markets
T: +27 82 6869345