The South African Revenue Service (SARS) has implemented new disclosure requirements for company and trust tax returns with effect from 16 September 2024. The most significant change involves the mandatory disclosure of ultimate beneficial ownership (UBO).
This new rule requires businesses to provide detailed prescribed information about the ultimate beneficial owners of their shareholders – essentially the “warm bodies” who ultimately own or control the entity, notwithstanding the first level of ownership being structures such as trusts and/or holding companies.
This enhanced transparency aligns with South Africa’s goal to be removed from the Financial Action Task Force (FATF) grey list, which focuses on combating money laundering and terrorism financing. It is part of a broader global trend aimed at improving financial transparency and reducing financial crime. Compliance with these regulations is no longer optional, and failure to do so may result in penalties and deregistration of companies by the Registrar of Company (CIPC) that fail to meet these requirements.
A beneficial owner is defined as any individual who, either directly or indirectly, ultimately owns or controls an entity. SARS now requires taxpayers to disclose the following prescribed detailed information for each beneficial owner:
- Full Names (first name, surname, and initials)
- Date of Birth
- Identity Number (or Passport details if applicable)
- Income Tax Reference Number
- Email Address
- Grounds for beneficial ownership in relation to the entity (e.g., holding securities, exercising control, appointing board members, etc.)
Taxpayers are required to provide complete and accurate information regarding their beneficial owners on their ITR14 (company tax return) or ITR12T (trust tax return).
Effective 1 July 2024, it is also mandatory for all companies to file an updated Beneficial Ownership Declaration with CIPC as part of the annual return; thereby enabling SARS, CIPC, and the Master of the High Court to compare records to ensure consistency and compliance.
Taxpayers who fail to submit correct and complete UBO details will be subject to penalties, including possible fines, delays in processing, or compliance notices. Companies that intentionally or negligently provide inaccurate or incomplete information face severe consequences.
The new UBO requirements imposed by SARS form part of a global movement towards financial transparency, aimed at preventing illicit financial activities such as tax evasion, money laundering, and terrorist financing. For businesses in South Africa, these changes present a clear compliance challenge.
Should you be unsure regarding any aspects of the new UBO disclosure requirements, we strongly advise that you consult with a tax professional and/or legal advisor in this regard. The complexities involved in identifying beneficial owners, especially in cases of complex structures or trusts, may require professional assistance to ensure full compliance.
Our team is here to provide guidance and support throughout this process, and we welcome the opportunity to assist you in meeting the filing requirements. If you have any questions or need assistance, please feel free to reach out to us at tax@rvn.co.za. Written by: Anika Bester – RVN Taxation Services.
While every reasonable effort is taken to ensure the accuracy and soundness of the contents of this publication, neither writers of articles nor the publisher will bear any responsibility for the consequences of any actions based on information or recommendations contained herein. Our material is for informational purposes and should not be construed as financial advice.