The Panama Papers may have stopped hogging headlines around the world, but that doesn’t mean we’re anywhere near hearing about the end of this one.

The shockwaves are still reverberating far and wide, and here at home many have asked just what the legalities surrounding offshore investing are.

As a starter we should say offshore investing by South Africans is very common, although not everyone may be aware that they are doing so.

Here’s Mondaq clearly laying out what us Saffers should know:

If, for example, you have a pension fund or have invested in offshore funds, chances are that you have investments in a tax haven. You may therefore, either directly or through your pension fund, hold units or shares in a company or some other offshore vehicle located in some or other tax haven. This vehicle will then hold the underlying shares and other assets that make up your investment portfolio. The reason for setting up these investment vehicles in a tax haven is precisely to avoid paying multiple levels of tax on your underlying investments. These are examples of legal structures.

If South African resident individuals establish their own offshore trust or some other offshore investment vehicle in a tax haven, and the vehicle acquires various offshore assets, the individuals will be required to make disclosures to the exchange control authorities at the South African Reserve Bank and  the South African Revenue Service. Provided that these disclosures have been made, that approvals are obtained, and that the relevant tax returns have been correctly completed on an annual basis, these also constitute examples of legal offshore structures.

That all seems to make sense, although I tend to outsource all such matters, so just what constitutes illegal offshore investing then?

Illegitimate offshore structures are, for example, ones where individuals set up offshore trusts without making the necessary disclosures and obtaining the necessary approval either from the exchange control authorities or the South African Revenue Service. An offshore structure is also illegitimate when there is no ongoing compliance with the relevant tax laws, such as instances where the relevant tax returns are not correctly and timeously submitted by the relevant parties.

South Africans with money tucked away that they haven’t properly disclosed are left with one last opportunity to avoid being outed:

…a six-month tax and exchange control amnesty is proposed from October 2016. For any South Africans with illegal offshore structures, given the increasing likelihood of these structures coming to light (either through leaks such as the Panama Papers or due to the increasing information sharing between international revenue authorities), this may be their last chance to avoid being named and shamed.

Time is ticking, so if you haven’t yet organised your ducks in a row then best you get a move on.

Talk to some people in the know over at Galbraith Rushby, expert advice goes a long way to avoiding that whole ‘name and shame’ debacle.

[source:mondaq]

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