By Judith Ugwumadu | 14 October 2013

South Africa and the UK have agreed to work closer together to tackle offshore tax evasion, the UK Treasury announced today.

The African country will join the pilot scheme for the automatic exchange of tax information launched by UK, along with France, Germany, Italy and Spain. 

South African finance minister Pravin Gordhan said: ‘The automatic exchange of tax information will contribute to the establishment of a more effective, efficient and fair international tax system. As more countries join this movement, it will ultimately benefit poor countries who are often the victims of organised efforts to undermine their tax bases.

‘In this regard, there needs to be increased cooperation between advanced and developing countries in order to enhance the protection of the tax base of developing countries and to build the capacity of their tax administrations.’

He added that South Africa has been working with more than 28 fellow African nations through the African Tax Administration Forum to improve the efficacy of their tax legislation and administrations.

The Group of Twenty has also committed to provide technical assistance to developing countries to ensure they benefit from greater tax transparency, given the importance taxation plays in governance and state building.

George Osborne, UK chancellor of the Exchequer, said South Africa had taken a significant step by joining the pilot scheme.

‘[It] shows the increasing momentum behind stepping up our efforts to crack down on offshore tax evasion,’ he said. 

‘The message to those who attempt to conceal their assets offshore is clear: our resolve is stronger than ever, the net is closing in and the world is becoming a smaller place for those looking to evade their responsibilities by seeking not to pay the taxes that are due.’