Sars’ Automatic exchange of information (AEOI) has been upgraded, through strategic adoption of the Organisation for Economic Cooperation and Development’s (OECD) Crypto-Asset Reporting Framework (CARF) and an updated Common Reporting Standard (CRS).

Effective 01 March 2026, this routine exchange of information will involve the systematic and periodic transmission of “bulk” taxpayer information from the source country to the taxpayer’s country of residence. Quite simply, per Sars’ own explanation from their AEOI Homepage:

“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.”

Practically, this allows Sars to obtain and analyse offshore funds, assets, and other interests held by South African taxpayers in over 120 other countries, with the end goal of enhancing the detection of non-compliance through these data driven insights and pursuing sanctions against the offending taxpayers.

Leveraging Tax Legislation

Although the AEOI may be a foreign concept to South African taxpayers, Sars have factually been able to request taxpayer information from third parties, per the Tax Administration Act, 28 of 2011 (TAA), for many years.

Section 3(3) of the TAA both empowers and obliges Sars, if in accordance with an “international tax agreement” to exchange information:

Excerpt from the Sars External BRS 2026 Automatic Exchange of Information, dated 28 January 2026

Taking compliance beyond information, and to collections, Sars may also recover tax on behalf of foreign governments, per section 185 of the TAA; a statutory power which we have seen used widely for many years.

Step 1 – the foreign revenue authority issues a certificate for the tax recovery on their behalf:

Step 2 – Sars issue a Notice of Collection in terms of section 185 (1) (b) of the TAA, per the certificate:

Step 3 – the onus of proof is on the taxpayer to admit or deny liability, for the total or a lesser amount, with failure resulting in Sars proceeding with collection steps, as though the tax payable were due under a South African tax act!

Automatic Exchange of Information Aimed to Eradicate Non-Compliance

The investigation into South African taxpayers’ offshore interests has long been on the cards with Sars, with foreign asset/income disclosure notices being issued as far back as 2020, entailing a blanket disclosure of offshore assets. At the time, many taxpayers may have thought best to feign ignorance, but now, there is no escape for the non-compliant South African taxpayer, with over 120 countries playing open cards with Sars.

How this has played out practically, is the revenue authority has risen to the occasion, with aggressive collection steps being implemented against historically non-compliant taxpayers, including salary garnishes, Sheriff callouts and even taking money directly from business and/or personal accounts. The extension of Sars’ reach has now been concretised, empowering Sars further, to reach beyond the shores of South Africa, and obtain all necessary information.

Now is not the time to take risks. Sars’ approach clearly shows we are dealing with a competent revenue authority, so why risk it when compliance is evidently the preferred way forward, which Sars is willing and ready to assist all taxpayers with.

The burden of proof remains on the taxpayer, particularly where foreign income, capital gains or source must be substantiated. What changes under the AEOI regime is Sars’ ability to enforce sanctions on non-compliance, more surgically, and with far great access to third party data.

The Best Strategy to Remedying Non-Compliance

In order to protect yourself from a wall of penalties and interest, even possible jail-time, it remains the best strategy that you always ensure compliance. 

Where you find yourself on the wrong side of Sars, there is a first mover advantage in seeking the appropriate tax advisory, ensuring the necessary steps are taken to protect both yourself and your family, from paying for your crimes of non-compliance. However, where things do go wrong, Sars must be engaged legally, and we generally find them utmost agreeable where a correct tax strategy is followed.

As a rule of thumb, any and all correspondence received from Sars should be immediately addressed, by a qualified tax specialist or tax attorney, which will not only serve to safeguard the taxpayer against Sars implementing collection measures, but also being specialists in their own right, the taxpayer will be correctly advised on the most appropriate solution to ensure their global tax affairs are in order.

Written by Jashwin Baijoo, Partner and Head of Strategic Engagement & Compliance at Tax Consulting SA