In South Africa, the South African Revenue Service (SARS the local equivalent of the IRS) has just issued a draft public notice for comment and it refers to strange new terminology, not always correctly understood by the non-American resident.
Most US expats and failed SA expats returning from the USA with a green card in the back pocket, are all facing being caught red handed. Yes, for many years SARS was not the best of gossip queen in the OECD. The cam the Krok case and SARS received some interesting info from the ATO. Not only did SARS wake up to the word FOUNDATION they also saw the benefit of acting in “cohort” with another tax authority.
Suddenly the effort to make FATCA happen for FFI’s in South Africa, became an interesting source gathering exercise. Someone whispered in their ear that a green card holder probably has a USA and other bank accounts he did not report on his return to SARS!
Forced FATCA compliance could lead to a win-win situation for SARS and it’s tax treaty partners.
Suddenly, despite FATCA delays in the USA we see FATCA speed race to compliance. On the SARS new issue page they promise a full seven-day period to publicly comment, but for FATCA they published a draft today (27th of May) for comment no later than 30 May 2014. Three days no equals a week?
Now for any informed SA tax adviser the last business day of May is a nightmare, as all payroll tax reconciliations needs to be filed as the employee’s tax filing season will start mid June early July. It also the day most VAT vendors need to report their two monthly VATable sales using the brand new PAN form bounced in us on May the 24th!
Did SARS really expect meaningful replies? Oh, I see! Perhaps they did this to slip through the record keeping standards without most of us noticing?
Not really! See SARS has run the BRS (Modernised 3rd Party Reporting Platform) for some time now and most if not all the FATCA requirements, were already contained in the local requirements.
All this said and done, before one can read and try to understand all the new jargon and rules, there is a need for a cheat sheet listing the real meaning of the unknown acronym.
The latest buzz word that entered SA tax law is BRS:AEOI which is supposed to mean?
There is so many new tax acronyms, one can’t be blamed for not always knowing the full phrase behind the tax acronym.
To guide you, we add a few new once, all from an SA perspective yet they are all well-known international acronyms or abbreviations. Below is a short list some of the more widely used acronyms relevant to FATCA reporting from South Africa. Yes, probably a boring read for a US tax adviser!
Here they are, but it is not an exhaustive list:
AEOI – Automatic Exchange of Information aka AEFAI as per SARS press release on BRS
AEFAI – Automatic Exchange of Financial Account Information
ATO – Australian Tax Office www.ato.gov.au
BRS – Business Requirement Specification or Direct Data Flow Channel Guide aka SARS Modernised 3rd Party Reporting platform, used to report inter alia PAYE, VAT, Investment Income (IT3’s).
CRA – Canadian Revenue Authority – http://www.cra-arc.gc.ca/menu-eng.html
eFile – the South African online tax filing portal www.sarsefiling.co.za
Excon – Exchange Control aka FinSurv- SA monetary laws administered by SARB
FATCA – Foreign Account Tax Compliance Act – FFI and other tax offices dotted over the word reports on you to the IRS. An USA Act see http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-FATCA
FBAR – Report on Foreign Bank Account reporting – you tell IRS
FFI – foreign (non-US) financial institutions – FATCA terminology compare with USFI or FI that is USA based
FinSurv – Financial Surveillance, previously known as Control or SARB’s Exchange Control watchdog
HMRC – Her Majesty’s Revenue & Customs – UK tax office http://www.hmrc.gov.uk
IGA – Model 1 and Model 2 intergovernmental agreements (IGA) or FATCA agreement between IRS and SA on the AEOI process using the BRS designed and implemented in the various IGA jurisdictions
IRD – Inland Revenue – New Zealand aka Māori as Te Tari Taake
IRS – Inland Revenue Services in the USA www.irs.gov
MTP (SA) – Master Tax Practitioner in SA – the Who’s Who in SA tax environment
PAN – no, this one was born in Africa! An old fashioned remittance advice adapted to cater for EFT’s transferred to SARS as well as cash over the counter payments.
PR – Tax practitioner registered with SARS
SARB – South African Reserve Bank, equal to the Central Bank in international terms www.resbank.co.za
SARS – South African Revenue Service – www.sars.gov.za
TAA – Tax Administration Act – South African Act dealing with C:SARS rights to administer tax acts
USFI – U.S. financial institutions the internal US hold Co aka as lead FI reporting for all FFI’s in the FI Group
Can one call the list a complete list of tax acronyms? Most certainly not, South Africa has only commenced the FATCA journey.
This list is work in progress, dictated by Uncle Sam’s need to monitor delinquent taxpayer, now clearly supported by SARS and other IGA’s.
In closing, IGA’s is such a loaded term. In our home language when child plays in the sand pit and tries to pick up a spider, the instruction given to indicate bad, be careful associate with pain is “ga-gas”, a very guttural g followed by another. Said quickly IGA’s reminds one of your mother pointing a finger, shaking her head from left to right, saying “ga-gas” or in English, drop it, danger, not what you think it is, it can bite and sting.
The bite and the sting and all the other painful consequences will not be fully understood nor appreciated for some time.
How long before we see the true benefits? My USA tax adviser answered: How long is a piece of string will be known the day the Republicans and the Democrats agree and publish a mutually acceptable target tax rate now that all and sundry is paying all their taxes to the same IRS.
I was tempted to ask him if there is any hope the USA will one day be governed by a political party known as the Taxpayer Party. Then I realised, FATCA is not to be mistaken as an invite to a tea party delivered at the IRS HQ!