What is Automatic Exchange of Information?
Automatic exchange of information (AEOI) is information required by law to be collected by financial institutions around the world for reporting to tax authorities. Tax authorities will exchange this information under international information-exchange agreements to help make sure everyone pays the right amount of tax.
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 FATCA IGA is an international tax agreement and part of the domestic law of South Africa. It requires qualifying South African Financial Institutions to identify and report specified information for each U.S. reportable account. Such accounts are held by a Specified U.S. Person or Passive Entity with Controlling Persons that are Specified U.S. Persons. Reporting Financial Institutions must report this account information to SARS.
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.
South Africa is an early adopter of the new international standards for AEOI which include both FATCA and CRS.
What Reporting Is Required under AEOI?
In terms of the FATCA Intergovernmental Agreement with South Africa, and the OECD Common Reporting Standard (CRS) Regulations issued under the Tax Administration Act, certain South African financial institutions must review their financial to determine which accounts are held by U.S. or any other foreign tax residents. Financial institutions must report the prescribed information of all these reportable accounts to SARS. For more information on which financial institutions must report, see
The information must be reported to SARS in the data format prescribed by the applicable AEOI Business Requirement Specification (BRS). The reporting periods are aligned with tax years, i.e. beginning 1 March until the end of February of the subsequent year. The closing date for the AEOI Third-Party Data returns for the 2025 period was 31 May 2025. For subsequent reporting periods, the submission date will also be at the end of May each year.
What Is Done with the Financial Account Information Reported by Reporting Financial Institutions?
SARS must collect and exchange this information with the relevant foreign jurisdictions with which South Africa has a bilateral or multilateral international agreement. Under the legislation (FATCA IGA and CRS Regulations) and the international AEOI agreements, SARS must enforce compliance with FATCA and CRS reporting. This includes imposing sanctions for non-compliance with these laws.
What Are the Sanctions for AEOI Non-Compliance?
Reporting financial institutions (RFI) submitting 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 & CRS Regulations.
- Ensure that the return is complete and correct.
- Comply with the due-diligence requirements prescribed by South African and international regulations (FATCA), or by the Commissioner in a public notice consistent with the international tax agreement or the international tax standard.
The account holders or clients of RFIs and other persons have the following statutory obligations under Section 26 of the TAA:
- If — to submit a return under Section 26 and to comply with the requirements of this section — an RFI requires information or a document from another person (including an account holder or client), that person must provide the information or document required within a reasonable time.
For CRS, if an RFI has no foreign reportable account holders to report, it must submit a nil-return. The sanctions for non-compliance with these statutory obligations include the imposition of fixed-amount administrative penalties under Chapter 15 of the TAA, for the incidences of non-compliance specified in Public Notice 597 (FATCA) and Public Notice 193 (CRS).
Which Types of Non-Compliance Are Subject to Administrative Penalties?
The incidences of non-compliance with the FATCA IGA as specified in Public Notice 597 that are subject to administrative penalties are:
- Failure by an RFI to submit a return by the later of 10 July 2015 (the date of Public Notice 597) or the dates for submitting the returns under Public Notice 509, i.e. 30 June 2015 (for the first reporting period of 1 July 2014 to 28 February 2015), and 31 May for subsequent years (every reporting period after the first reporting period).
- Failure to remedy the partial or non-implementation of a due-diligence requirement under the FATCA IGA within 60 days of the notification by SARS of the partial or non-implementation of the requirement.
- Failure to remedy a minor error or an incidence of significant non-compliance referred to in Article 5 of the FATCA IGA within 60 days of the notification by SARS of the minor error or non-compliance.
The incidences of non-compliance with the CRS Regulations as specified in Public Notice 193 that are subject to administrative penalties are:
- Failure by an RFI to submit a return as required by a public notice issued under Section 26 of the TAA
- Failure by an RFI to remedy the partial or non-implementation of a due-diligence requirement under the CRS Regulations within 60 days.
- Failure by an RFI to remedy the non-compliance with any obligation under the CRS Regulations within 60 days of the notification by SARS of the non-compliance.
- Failure by an RFI to, within 60 days of notification by SARS, provide the prescribed details of:
- A reportable person that is an account holder;
- Any controlling person of an entity which is a reportable person; or
- Any other person.
- Failure by:
- A reportable person that is an account holder;
- Any controlling person of an entity which is a reportable person; or
- Any other person, listed by an RFI in response to a notice contemplated in paragraph 3, to comply with the person’s obligations under Section 26(4) of the TAA.
How Does Reporting Work?
South African financial institutions must determine if they are Reporting Financial Institutions under FATCA IGA CRS Regulations. If financial institutions are unsure if they are RFIs, they must consult their advisors or contact SARS by emailing [email protected]. Generally, in terms of FATCA IGA, financial institutions located in South Africa that are FATCA RFIs 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.
For CRS, financial institutions resident in SA that are CRS RFIs, 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.
How is the penalty calculated?
The AEOI administrative penalty is based on the fixed-amount penalty in the table below. The administrative-penalty table aligns with the table in Section 211(1) of the TAA. The calculation for penalties is for each incidence of non-compliance. The amount of the penalty is structured to be proportionate to the size of the non-compliant person based on that person’s assessed loss or taxable income for the preceding year.
Fixed amount penalty table:
| Item | Assessed Loss or Taxable Income for ‘Preceding Year’ | ’Penalty’ |
|---|---|---|
| (i) | Assessed loss | R250 |
| (ii) | R0 – R250 000 | R250 |
| (iii) | R250 001 – R500 000 | R500 |
| (iv) | R500 001 – R1 000 000 | R1 000 |
| (v) | R1 000 001 – R5 000 000 | R2 000 |
| (vi) | R5 000 001 – R10 000 000 | R4 000 |
| (vii) | R10 000 001 – R50 000 000 | R8 000 |
| (viii) | Above R50 000 000 | R16 000 |
Tip: the administrative penalty will be escalated by the same amount for each month up to 36 months, as long as the non-compliance is not remedied.
How to Remedy an Administrative Penalty
Step 1: Remedy the Non-Compliance
- Non-filing of return by RFI: resolve the non-compliance by submitting the prescribed return (FT102 return). For the submissions dates, see
- Other incidences of non-compliance by RFIs or account holders/clients: comply with the relevant obligation.
- Penalties will accrue as long as the RFI is non-compliant.
Step 2: Pay the Penalty
If you have no reasonable basis for non-compliance, or no exceptional circumstances hinder you from complying, pay the penalty. SARS can begin to recover the penalty if it remains unpaid.
Step 3: Request for Remittance of Administrative Penalty
If you have a reasonable basis for the non-compliance (and this is your first non-compliance penalty), or there are exceptional circumstances that rendered you incapable to comply, ask SARS to remit the penalty by following these procedures:
- Download the AEOI Penalty Remittance/Dispute Form.
- Select “Request for Remittance” on the form.
- Provide the grounds for your non-compliance, demonstrating a reasonable basis for the non-compliance, or that there are exceptional circumstances that caused your non-compliance.
- You can submit the AEOI Penalty Remittance form at the nearest SARS branch or by post. In the case of Large Business clients only, the completed remittance form can be emailed to [email protected].
If SARS does not remit your penalty, you can object and appeal SARS’s decision not to remit the penalty by following the dispute process set-out below. Note: before lodging a remittance/dispute to SARS, remedy all incidences of non-compliance that resulted in the imposition of the penalties to avoid the remittance/dispute being rejected by SARS.
Step 4: Lodge an Objection if the Penalty Is not Remitted
If the penalty is not remitted under Step 3 and you believe SARS’s decision not to remit is wrong, you may object and appeal the decision not to remit.
4.1 Notice of Objection
- Download the AEOI Penalty Remittance/Dispute Form.
- Select “Notice of Objection” on the form.
- Notice of Objection should be submitted only if a request for remittance for an administrative penalty has been disallowed or selectively allowed.
- You can submit the dispute form at the nearest SARS branch or by post.
- In the case of Large Business clients only, the completed remittance form can be emailed to [email protected].
4.2 Notice of Appeal
- Download the AEOI Penalty Remittance/Dispute Form.
- Select “Notice of Appeal” on the form.
- An appeal should be submitted only if a Notice of Objection has been disallowed or selectively allowed.
- You can submit the dispute form at the nearest SARS branch or by post.
- In the case of Large Business clients only, the completed remittance form can be emailed to [email protected].
Note: conclude each step in the dispute process before proceeding to the next option. Otherwise, SARS will invalidate the dispute application.
What about Criminal Sanctions?
Criminal proceedings may be instituted under Section 234 of the TAA if a person wilfully or negligently:
- Fails to submit a return or document to SARS, or issue a document to a person as required under a tax Act, such as the TAA, which Act includes any regulation such as the CRS Regulations or public notice issued thereunder, as well as an international tax agreement such as the FATCA IGA, entered into in accordance with a tax Act;
- Fails to retain records as required under the TAA (including any regulation or public notice issued thereunder);
- Submits a false certificate or statement under Chapter 4 of the TAA;
- Issues an erroneous, incomplete, or false document required to be issued under a tax Act to another person (for example, a false self-certification of tax residency required from an account holder by an RFI);
- Fails to give information, documents, or things required in terms of the TAA;
- Fails to comply with a directive or instruction issued by SARS to the person under a tax Act;
- Fails to disclose to SARS any material facts which should have been disclosed under this Act, or to notify SARS of anything which the person is required to notify SARS under a tax Act.
Upon conviction, the person is subject to a fine or to imprisonment for a period not exceeding two years. Also, a person who intends to evade or to assist another person to evade tax fraudulently may be guilty of tax evasion under Section 235 of the TAA or the common-law offence of fraud.
