The Special Voluntary Disclosure Programme (SVDP) ended on 31st August 2017.
New global standard for the automatic exchange of information (Common Reporting Standards or CRS ) between tax authorities of different countries will provide South African Revenue Services (SARS) with additional information from 2017.
Taxpayers therefore had the opportunity to regularise both their tax and exchange control affairs thus curbing tax evasion on a global basis.
Fortunately, there is a permanent Voluntary Disclosure Programme (VDP) which was launched as part of the Tax Administration Act no 28 of 2011 and commenced in October 2012 for all tax types excluding customs and excise.
In terms of the permanent VDP, undeclared income is disclosed as it should have been whereon tax and interest is levied, generally understatement and other penalties are waived.
The VDP is available to regularise tax defaults on both local and offshore assets. SARS must not pursue criminal prosecution for a tax offence arising from the default. SARS requires the prospective applicant to make a full and proper disclosure of defaults committed by the prospective applicant.
The advantages of applying for VDP relief under the Permanent VDP and pursuant to the conclusion of a voluntary disclosure agreement are the following:
1. No criminal prosecution for any tax offence relating to the default committed by the prospective applicant;
2. In most cases, the waiver of any understatement penalty that would otherwise have been imposed under the Tax Administration Act (TAA)
3. 100% relief in respect of an administrative non-compliance penalty that was or may have been imposed under Chapter 15 of the TAA or a penalty imposed under a tax Act, excluding a penalty imposed under that Chapter, or in terms of a tax Act for the late submission of a return.
Thus, a penalty which would otherwise have been imposed for the late payment of any tax may be waived under the Permanent VDP.
Similarly, Exchange Control regularisation can still be done by application to the Financial Surveillance Department of the South African Reserve Bank. On 11 September 2017, the South African Reserve Bank’s (SARB) FinSurv SVDP Unit issued a document setting out the procedure for regularising unauthorised assets that were not declared before 31 August 2017 (SARB Notice).
There are two options available to potential applicants.
The penalty for contraventions will be determined by the Compliance and Enforcement Division. As a general guideline (for a voluntary disclosure by the contravening party) the minimum penalty is 10% and in respect of serious contraventions where unauthorised assets are retained abroad, the penalty could be as high as 40%.
South African residents with unauthorised foreign assets who do not voluntarily approach the Financial Surveillance Department (FinSurv) for assistance may face the full force of the law. In this regard, the FinSurv is mandated to, where appropriate; recover the full amount of the contravention.
Should you have any queries regarding the Voluntary Disclosure Programme, please contact us to set up an appointment to discuss.