Automatic Exchange of Information

What’s New?

8 April 2025 – SARSQA Connect Direct Public Certificate has changed

SARS’s “Connect: Direct” Public Certificate has changed. For those who have not updated it yet, please urgently contact Third-Party Data Support ([email protected]) to get the latest SARSQA Connect: Direct Public Certificate to update it on your side.

What is important to note?

26 November 2024 – Additional Compliance Reason Codes. This Clarification Note provides additional Compliance Reason Codes 005 to 009 for use with Appendix L for reporting with the AEOI External BRS Version 2.0.0-25.
10 February 2023 – Updated Clarification Document for AEOI (FATCA) Reporting TIN Codes. This document clarifies the application of the supplied codes for the Taxpayer Identification Number (TIN) data fields for FATCA submissions. This Version 3 was updated to align with the IRS Notice 2023-11.

What Is Automatic Exchange of Information (AEOI)?

This information is legally required by the US Foreign Account Tax Compliance Act (FATCA) and the OECD Common Reporting Standard (CRS). Financial institutions around the world must participate in AEOI for reporting to tax authorities. Tax authorities will exchange this information to help make sure everyone pays the right amount of tax.

As part of the administration of the tax Acts as set out in the South African Tax Administration Act, SARS may provide administrative assistance to foreign governments under an international tax agreement, such as a Double Tax Agreement) or other multilateral or bilateral information exchange agreements between South Africa and foreign countries. In turn, these foreign countries may also provide similar administrative assistance. The three forms of information exchange between tax authorities are spontaneous exchange, exchange of information on request (EOIR), or AEOI.

AEOI involves the systematic and periodic transmission of “bulk” taxpayer information by the source country to the residence country concerning various categories of income. In addition, information concerning the acquisition of significant assets may be used to evaluate the net worth of an individual, to see if the reported income reasonably supports the transaction. As a result, the tax authority of a taxpayer’s country of residence can check its tax records to verify that taxpayers have accurately reported their foreign-sourced income or assets. AEOI deters tax evasion and promotes voluntary compliance.

Greater transparency and AEOI between tax administrations help to counter cross-border tax evasion, aggressive tax avoidance, and base erosion and profit shifting (often done through transfer pricing arrangements). AEOI has become a new international standard, in addition to EOIR.

Four building blocks must be in place for a jurisdiction to implement AEOI. (See What Are the Requirements for AEOI Implementation) South Africa is an early adopter of the new international standards for AEOI, which include both FATCA and the CRS.

AEOI under FATCA

In 2010, the United States introduced the Foreign Account Tax Compliance Act (FATCA). This is an effort to improve tax compliance by U.S. citizens if foreign jurisdictions. The reporting regime under FATCA requires foreign financial institutions (FFI) to report information to the US Internal Revenue Service (IRS) relating to U.S. account holders. To achieve this, the U.S. introduced a model intergovernmental agreement (IGA). The FATCA IGA is an agreement between the government (tax administration) of the U.S. and those of other countries. Such an IGA was signed between South Africa and the U.S. Reporting South African financial institutions must comply with the requirements and obligations set out in the IGA from 1 July 2014. The US/SA FATCA IGA provides for SA FFIs to identify and report information with respect to each U.S.-reportable account to SARS. FATCA applies to an entity that is a financial institution, as described in the IGA, that maintains financial accounts where the account holder is a specified U.S. person, or passive entity with controlling persons that are specified U.S. persons.

The accounts of these persons are FATCA-reportable accounts, meaning the FFIs must report the information prescribed in the IGA to SARS. SARS will in turn share the information with the IRS, and has done so since 2015. See also How Does FATCA Reporting Work?

AEOI under CRS

In 2014, the OECD, working with G20 countries, developed the Standard for Automatic Exchange of Financial Account Information in Tax Matters (the Standard), which encompasses the OECD’s Common Reporting Standard (CRS). The Standard requires FIs of CRS countries (referred to as “participating jurisdictions”) to determine and report to their tax authorities financial-account information of account holders that may be tax-resident in a foreign jurisdiction (other than the U.S., which is regulated by FATCA). Every year, if an AEOI agreement is in place, this information is automatically exchanged between SARS and its CRS-exchange partners. If no such agreement is in place, SARS must retain the information until it has such an agreement in place.

To maintain as much commonality as possible, the Standard draws on the intergovernmental approach to implementing FATCA, but does not always follow it owing to the differences between bilateral and multilateral approaches. CRS is, however, much wider than FATCA.

The AEOI portal explains the work of the OECD and the Global Forum on Transparency and Exchange of Information for Tax Purposes (GFTEI) regarding AEOI and CRS.

Who Must Report?

Financial Institutions

For FATCA IGA: in terms of the FATCA IGA, the financial institutions that must apply the prescribed due-diligence requirements to find reportable accounts and report the prescribed information include: South African banks and custodians; brokers; asset managers; private equity funds; certain investment vehicles; long-term insurers; and other participants in the financial system. A South African financial institution must determine if it has a reporting obligation in terms of the FATCA IGA.

Annexure II of the IGA describes entities that are exempt beneficial owners or deemed compliant FFIs, and the accounts which are excluded from the definition of Financial Accounts.

For CRS: financial institutions resident in SA (referred to as Reporting Financial Institutions or RFIs) that must apply the prescribed due-diligence requirements to find reportable accounts, and report the prescribed information, include: any financial entity (whether a legal entity or legal arrangement such as a trust or partnership) that is a Custodial Institution, a Depository Institution, an Investment Entity, or a Specified Insurance Company. Certain financial institutions or financial accounts are specifically excluded under CRS.

The CRS Regulations give a general description of excluded financial institutions or accounts. Specific exclusions are listed in Annex 1 and Annex 2 to the regulations.

South African financial institutions must identify accounts held by customers who are foreign tax-residents or entities connected to foreign tax-residents. These financial institutions must report these accounts to SARS. SARS will then report the account information to the respective foreign tax authorities. Similarly, foreign financial institutions must identify their South African tax-resident customers and report their accounts through their local tax authorities to SARS.

Individuals and Businesses

If you have an existing account: your financial institution may contact you to confirm your country or countries of tax residence. This is to establish whether you have any accounts that need to be reported under FATCA or CRS laws. Your financial institution may also contact you if their records indicate that you could be a foreign tax resident. This might be because you have provided an address or other information for a country outside South Africa.

If you open a new account: your financial institution must ask you to certify your residence for tax purposes if you open a new account. They may ask you to provide forms and documentation. This will apply for most types of financial accounts. If you are a foreign tax resident, you must provide your tax reference number or equivalent. This is the number used to identify you to the tax authority in the foreign country. If you don’t have one, you will be asked to provide a reason. See also the OECD Rules on Tax Identification Numbers in Different Countries.

Accounts held by entities (such as companies, trusts, partnerships, or associations): if you are opening a new account on behalf of a legal entity or arrangement (such as a trust, partnership, company, or association), your financial institution must obtain information from you about:

The tax residence of the entity.
The nature of the entity’s business.
(In some circumstances) the individuals who control or beneficially own the entity or have connections to the entity. This includes their tax residency and their tax reference number, or equivalent if they are a tax resident outside South Africa.

Your financial institution may also contact you for this information for your existing accounts. This will help them comply with their obligations under FATCA and CRS laws.

See more information on:

How Does FATCA Reporting Work?
How Does CRS Reporting Work?

What Must Be Reported?

For FATCA, the information required to be reported for an account is described in Article 2 of the FATCA IGA. For CRS, the information required for account reporting is described in Section I of the CRS Regulations, as interpreted by the CRS Commentary.

A financial account is a reportable account if it is held by one or more reportable persons (individuals) or by a passive non-financial entity, with one or more controlling persons, that is a reportable person (individual).

The following financial account information must be reported:

The name and an identifying number of the RFI (its South African income tax reference number).
The account number of the reportable account (if no account number is available, a functional equivalent).
The account balance or value (in the currency in which the account is denominated) at the end of the 12 months reporting period, or:
- If closed during the period, the balance on the day before its closure, and the fact of its closure.
- If the balance or value of an account is nil or a negative amount (e.g. an account is overdrawn), the RFI must report the balance or value as nil.
The following information depending on the type of account:
- Depository Account: the gross amount of interest paid or credited to the account during the 12-month reporting period.
- Custodial Account: the gross amount of interest, dividends, and other income generated from assets held in the account, or paid or credited to the account, during the reporting period; and the gross proceeds from the sale or redemption of financial assets (for CRS) or property (FATCA) during the 12-month reporting period.
- Any other account: the total gross amount paid or credited to the account holder during the reporting period, regarding which the RFI is the obligor or debtor, including the aggregate amount of any redemption payments made to the account holder during the 12-month reporting period.

For reportable persons, the information below must be given for each reportable person:

Name.
Address.
If an individual, her/his date of birth.
If an individual, the place of birth, i.e. town or city (unless the RFI does not have this information or is not required under SA law — e.g. FICA — to obtain such information, in which case the country of birth of the individual must be reported.
Jurisdiction(s) of residence (jurisdictions to be reported under CRS, and which are identified by the RFI by applying the due-diligence procedures. See also the OECD’s tax residency rules).
Taxpayer identification numbers issued by the jurisdiction(s) of residence (see the OECD’s Tax Identification Numberspage, which has information on the use and structure of TINs as submitted by each participating jurisdiction).

A nil return must be filed by an RFI that did not maintain any reportable accounts during the reporting period.

When Must It Be Reported?

AEOI submissions for both FATCA and CRS are due annually by 31 May of each year. Under the CRS return notice, RFIs must submit CRS returns by 31 May for every reporting period beginning 1 March and ending the last day of February the following year. If the deadlines are not adhered to, penalties may apply. Public Notice 597 lists the examples of non-compliance subject to administrative penalties. For more information, see AEOI Penalties. RFIs that submit AEOI third-party returns have the following statutory obligations under Section 26 of the TAA:

Submit the returns by the date specified in the public notices, namely the FATCA return notice and CRS return notice.
Submit the returns in the prescribed form and manner and containing the information prescribed by the AEOI BRS and the FATCA IGA and CRS Regulations.
Ensure that the return is full and accurate.
Comply with the due-diligence requirements prescribed in a tax Act; an international tax agreement (such as the FATCA IGA); an international tax standard (such as the CRS ); or by the Commissioner in a public notice consistent with the international tax agreement or the international tax standard.

How Must It Be Reported?

RFIs must submit either a data file or a NIL file with their prescribed information, and then the correlating declaration (FTI-02 form) to conclude their reporting obligations. The following process should be applied:

Step 1: prepare a data file per BRS 2016 Automatic Exchange of Information v2.0.0.25. Alternatively, if you have a NIL file submission, submit it on SARS eFiling using an FTI-01 form.

Step 2: If you have not done so, enrol for Third-Party Data Submission. You can use any of these channels:

eFiling (only to submit a NIL file)
Connect: Direct® (unlimited)
Secured File Gateway [HTTPS] (for files smaller than 10 MB)

Step 3: test your data file on the SARS Trade Test Platform. Request access from Third-Party Data Support (follow the steps in the trade testing setup guide).

Step 4: submit the data to SARS using your preferred channel in step 2 above.

Step 5: declare a summary of data submitted on eFiling with the FTI-02 form. See How to declare your Foreign Tax Information for the AEOI (External Guide) for more information.

Note: the reporting process is concluded only once the correlating declaration is submitted.