Dear <<First Name>>,
On 24 February 2016, the Minister of Finance in his Budget Speech announced the introduction of a Special Voluntary Disclosure Programme (VDP) to give a further opportunity for non-compliant taxpayers who still have undisclosed assets abroad to voluntarily disclose their offshore assets and income.
As stated in that media statement, applications for the proposed relief may be made in a limited period of six months commencing on 1 October 2016 and closing on 31 March 2017
The programme will see SARS and the South African Reserve Bank working jointly to ensure applications are assessed through one joint process for both tax non-compliance and exchange control contraventions.
The SARS relief proposed in terms of the Voluntary Disclosure Programme will be that:
- Only 50% of the total amount used to fund the acquisition of offshore assets before 1 March 2015, if the applicant failed to comply with a tax Act administered by SARS, will be included in taxable income and subjected to normal tax;
- Investment returns on the offshore assets received or accrued from 1 March 2010 onwards will be included in taxable income in full and subjected to normal tax. Investment returns prior to 1 March 2010 will be exempt from normal tax;
- Interest on tax debts arising from the disclosure of amounts used to fund the acquisition of offshore assets or investment returns in respect of those offshore assets will commence only from 1 March 2010.
- No understatement penalties will be levied where the VDP application is successful; and
- SARS will not pursue criminal prosecution for a tax offence where the VDP application is successful.
Exchange control relief:
- Exchange control relief, under the special programme, will allow South African residents to disclose and regularise their exchange control contraventions that occurred prior to 29 February 2016.
- Applicants may still have to pay a levy based on the market value of their foreign assets or structures.
- If the regularised assets or its sale proceeds are repatriated to South Africa the levy will be 5% of market value. If they are kept offshore the levy will be 10%.
- Those who fully disclose after the deadline will pay a settlement ranging from 10% to 40% as decided by the Reserve Bank.
Those who don’t disclose could face the full force of the law, meaning that, where appropriate, the Reserve Bank’s financial surveillance department can recover the full amount of the contravention.
Please contact Michael Haldane or Mauro Forlin should you have any questions regarding the above.
|
