Pretoria — South Africa has signed the Convention on Mutual Administrative Assistance in Tax Matters, which seeks to promote international co-operation in the assessment and collection of taxes.
Signed at the G20 Summit in Cannes on Thursday, South Africa joined 12 other nations who also signed the convention. The convention also seeks to encourage administrative co-operation in combating tax avoidance and evasion.
"The benefit for South Africa in signing the convention is that our country, through the South African Revenue Service, will automatically have the benefit of exchange of information, simultaneous tax examinations (audits) between revenue administrations of different countries, assistance in recovery and measures of conservancy, and the service of documents with other parties to the convention," said National Treasury.
The convention was developed jointly by the Council of Europe and the Organisation for Economic Co-operation and Development (OECD). It was opened for signature by the member states of the two organisations on 25 January 1988 and it was opened for signature by other countries on 25 May last year.
To date, 21 countries have signed the revised convention.
The G20 has placed specific emphasis on the importance for better international co-operation amongst revenue authorities as cross border tax avoidance and evasion have become easier with the liberisation of financial markets.
"The international response to the global financial crisis that began in 2008 and the sharp decline in revenue in many countries, including South Africa, has been to secure the integrity of financial systems through common, high standards of transparency and the exchange of information between countries," noted Treasury.
Finance Minister Pravin Gordhan views the signing of the convention as an important step by G20 leaders that will allow signatories to better address revenue losses in an "exceptionally" challenging environment.
Other countries that signed the convention on Thursday include Argentina, Australia, Brazil, Canada, China, Germany and India.
The two-day summit, which began yesterday, was expected to discuss the Eurozone debt crisis as it was among the most urgent issues facing leaders.