South Africa: Tax Transparency Notice

What the client is asked to certify

At onboarding, the client and every controlling person behind it certify each jurisdiction of tax residence and the taxpayer reference issued there. The certification is read against the rest of the file, and a correspondence address, a settlement account or a place of birth pointing somewhere else has to be reconciled before the account opens. A client tells the firm within 30 days of a change in its residence, and the South Africa entity requests a fresh certification whenever a change of circumstances shows up in the file. A mandate does not open on an unresolved certification, and a certification that cannot be reconciled closes the account.

What is reported, and to whom

Where an entity in the network is a reporting financial institution, it reports the accounts of clients resident in participating jurisdictions to its own competent authority, which forwards the data to the authority of the client's residence. What is reported is the account holder, the controlling persons, the account identifier, the balance at the year end and the gross amounts credited during the year. Reporting is annual and runs to the deadline the local authority sets. A client may ask IGUAKO Capital South Africa (Pty) Ltd for a copy of what was reported about it, and the copy is provided.

The local charge to tax

Each domicile has its own charge to tax, its own filing calendar and its own reporting obligations, and the group tax function keeps one return calendar covering all 28.

IGUAKO Capital South Africa (Pty) Ltd and IGUAKO Agri-Science Finance (Pty) Ltd are South African tax residents, file annual corporate income tax returns, and are registered for value added tax and employee withholding. Dividends and interest paid to the Port Louis platform bear withholding at the rate the treaty between the two countries allows, and the platform's tax residence certificate is filed with the national revenue authority before any reduced rate is claimed. South Africa exchanges financial account information automatically, and the Johannesburg entities report the co-investors in the rand-denominated finance vehicle to the revenue authority. Transfer pricing between Johannesburg and Port Louis is documented in a local file each year. Exchange control approval is obtained for every capital inflow and every repatriation of proceeds, and the approval reference is held on the transaction file.

Transfer pricing on funding, services and licences between South Africa entities and the rest of the group is documented each year and reviewed by the Group Head of Tax before the return is filed, alongside the returns of the other Africa & Indian Ocean entities.

What the firm will not do

The firm refuses a mandate whose purpose is to hide ownership, income or residence from an authority entitled to know it. It declines a request to invoice a party other than the one that received the service, to route a payment through an entity with no part in the transaction, or to describe a distribution as something it is not. Contracts with introducers, agents and other associated persons carry a clause forbidding facilitation, a right to ask how the work was done and a right to end the appointment on notice. The firm gives no tax advice, and the team in Johannesburg says so in writing before the first mandate is signed.

A structure that works only because a tax authority cannot see it is not a structure the firm will build. Where a client wants a view on its own position, the firm asks it to take that advice independently and records on the file that it did so.