Pretoria – Finance Minister Pravin Gordhan has instructed investigations into the so-called Panama papers.

“The Minister of Finance has noted reports on the clients of a Panamanian legal firm and certain South Africans that may be linked to offshore bank accounts,” said the Ministry of Finance in a statement on Tuesday.

The papers, which have been leaked to media, contain records from a Panama based law firm showing how business people and world leaders have been hiding money in offshore bank accounts.

The Finance Ministry said agencies like the South African Revenue Service (SARS) and South African Reserve Bank, among others, always investigate such reports to ensure that those that have such links have complied with the law.

The Ministry said holding funds in an offshore bank is not illegal if the necessary approvals and disclosures have been made to relevant authorities.

“There are many transactions on a daily basis between South Africans and the rest of the world, and holding funds in an offshore bank is by itself not illegal, as long as the necessary approvals and disclosures have been made to the relevant authorities.

“Funds in an offshore account may contravene exchange control regulations and tax laws if the source of the funds has not been disclosed to the appropriate authorities,” said the Ministry.

Individuals or companies who are involved in businesses offshore need to ensure that they do not fall foul of, for example, Exchange Control Regulations, 1961, the Income Tax Act, 1962, and Tax Administration Act, 2011.

“Treasury welcomes the release of such information which, like the recent release of information related to the clients of HSBC, provides the basis for authorities to act against those who illegally move funds out of South Africa,” said the Ministry.

It said the world is systematically narrowing the scope for those who want to hide their offshore assets and avoid paying their taxes due to the South African fiscus.

“It is in the interests of all those hiding their assets to come clean and disclose, and government offers such persons a way to legitimise their financial affairs before they are caught out,” said the Ministry.

In the 2016 Budget, a special voluntary disclosure programme (VDP) was proposed to make it easier for non-compliant individuals and firms to disclose assets held and income earned offshore.

SOURCE: SOUTH AFRICAN GOVERNMENT NEWS AGENCY