1. Panama Papers

2. OVERVIEW OF PANAMA PAPERS
Leak of information held by Mossack Fonseca, Panama-headquartered law firm involved in incorporation of offshore entities
First obtained by German newspaper Süddeutsche Zeitung and shared with the International Consortium of Investigative Journalists (ICIJ) in 2015
> 100 media partners involved in analysing the information
Details of the leak:
> 11.5 million internal files
> offshore companies
> banks, law firms, company incorporators, etc. involved
Includes nearly 40 years, from 1977 through the end of 2015
2.6 terabytes of data
Source: ICIJ 2

3. THE PANAMA DATA Data downloaded on 10 May 2016 (date released by ICIJ
Latest update in January this year
Roles vary: shareholder, director, beneficiary, nominees
1917 cases where South African residents are involved were found 3

4. Offshore company and bank account in the same jurisdiction
TYPICAL STRUCTURE (1)
Offshore company and bank account in the same jurisdiction MF
Intermediary
Nominee
Directors
Client
Bank 4

5. Export Under Invoicing (EUI)
TYPICAL STRUCTURE (2)
Offshore company and bank account in different jurisdictions
Intermediary
Bank MF
Nominee
Directors
Client
Export Under Invoicing (EUI) 5

6. Use of a Panamanian Foundation/Trust (PF/T)
TYPICAL STRUCTURE (3)
Use of a Panamanian Foundation/Trust (PF/T) MF
Nominee
Directors
Client
PF/T
Bank
Offshore Co
Intermediary 6

7. MATCHING THE DATA
Process to match the Panama data to the SARS database has been concluded
Results are:
1917 cases where South African residents are involved were identified
1666 of these remain after removing duplicates
The duplicates are those that have more than one offshore investment or play more than one role in one or more offshore structure
Thus far 1083 of the 1666 SA residents have been matched against the SARS database (i.e. registered taxpayers)
292 have no records on the SARS database
291 have incomplete records on the SARS database
Overwhelming majority are individuals 7

8. PROFILING THE MATCHES
Profiling includes verifying the Panama data against the income tax declarations of the South African residents
Thus far, 814 cases have been risk-profiled
Of which 701 meet the risk criteria (i.e. no or relatively low disclosure of foreign assets or income) 8

9. ENGAGING THE TAXPAYERS
In June 2016 engagements with selected taxpayers commenced
Most of the taxpayers responded
It soon became evident that a large proportion of taxpayers used a very similar offshore structure
It also became apparent that the offshore structures of 603 SA residents (out of the 1666) was facilitated by a single South African intermediary 9

10. SPECIAL VOLUNTARY DISCLOSURE PROGRAMME
The Special Voluntary Disclosure Programme (SVDP) commenced on 1 October 2016
It is scheduled to end on 31 August 2017
Thus far SVDP applications to the value of around R700 million (in tax revenue) were submitted to SARS
This represents roughly R4,4 billion in offshore assets
Relatively low numbers at this stage – volumes are expected to increase significantly towards the end of the SVDP window 10

11. ENFORCEMENT
Large scale Enforcement action (audits & criminal investigations) on hold to give SVDP a chance
But Enforcement preparation is in an advanced stage
Potential Enforcement cases have been selected, each representing a particular offshore structure
An in-depth investigation of one of these offshore structures has been concluded
The SARS findings have been challenged
The taxpayer's arguments as to the legitimacy of the structure have been provided
Consultations with SARS counsel on the way forward have commenced
Interesting though, some taxpayers who used this structure have applied for SVDP 11

12. INTER-DEPARTMENTAL COOPERATION
Close cooperation between National Treasury, SARS and SARB in the development of the Special Voluntary Disclosure Programme
The Financial Intelligence Centre provided advice and input to the Special Voluntary Disclosure Programme (see
The Independent Regulatory Board of Auditors provided advice and input on the same Programme (see 12

13. INTERNATIONAL COOPERATION
Joint International Tax Shelter Information & Collaboration Network (JITSIC)
Part of the Forum on Tax Administration (“FTA”)
Objective of JITSIC is to collaborate and exchange information in the most effective ways to tackle tax avoidance
SARS participates actively in special “Panama Papers” JITSIC meetings
In 2016 two meetings were held and in 2017 one was held thus far
Next meeting is in June this year
International action plan was agreed on, aimed at obtaining more information and sharing it efficiently amongst tax administrators 13

14. PROGRESS SUMMARY (against May 2016 SCoF presentation
Action
May 2016
March 2017
Matching offshore entities with residents
79 of a total of 560 off-shore entities have been matched (in degrees of accuracy) to 81 South African residents
620 of a total of 620 offshore companies have been matched to 1666 SA residents
Matching SA residents to SARS database
81 SA residents matched
1083 SA residents matched
Profiling the matched cases
Profiling not yet started
814 cases profiled
International cooperation
1 JITSIC meeting
3 JITSIC meetings
Inter-departmental cooperation
Not yet formally commenced
Commenced
Special Voluntary Disclosure Programme
In design stage
Implemented
In-depth investigation of offshore structures
Not yet commenced
In Progress 14