The tax information exchange agreement between South Africa and the Cook Islands was signed on 25 October 2013 and published in the Government Gazette on 8 January 2015. Like most jurisdictions, South Africa has signed several such agreements in the past few years, invariably with tax havens, or financial services centres as they prefer to be known, of which the Cook Islands is the most recent. They are a substitute for full double tax agreements.
These agreements all have substantially similar provisions. The tax authorities must provide information to each other that is foreseeably relevant to the administration and enforcement of domestic tax laws, the collection of taxes and the prosecution of criminal tax matters. The significance of the “foreseeably relevant” requirement is that tax information exchange agreements should not be used for information fishing expeditions. The requesting authority must exhaust its own means of obtaining the requested information before resorting to the agreement. The parties must ensure that they have the authority under their domestic law to obtain the kind of information likely to be requested.
Sometimes a party may request permission to visit the other party to interview individuals and examine records.
South Africa has concluded and ratified tax information exchange agreements with Barbados, Belize, Costa Rica, Dominica, Lichtenstein, Samoa and Monaco, but to date only those with Barbados and Liechtenstein have been ratified by both parties.
Given the global push towards tax base erosion and profit shifting, which invariably involves tax havens, we can expect a continuing increase in the number of these arrangements.
Peter Surtees
January 2015
