Amnesty announced for South Africans with undisclosed offshore assets
By Graeme Saggers, Nolands SA
Strictly speaking, what has been announced is not an amnesty but a “Special Voluntary Disclosure Programme (SVDP)”. However, it will operate in a similar manner to an amnesty, representing an opportunity for taxpayers to declare previously undeclared offshore income and benefit from reduced penalties and protection from criminal prosecution.
Although the law regulating the SVDP is still in draft format, below are six key aspects that are likely to feature.
1. The programme will run from 1 October 2016 to 31 March 2017 and relates to tax years up to and including 28 February 2015.
2. Unlike the standard Voluntary Disclosure Programme, the SVDP applies to both Income Tax and Exchange Control contraventions. The benefits to the taxpayer are:
- No understatement penalties will be levied
- The taxpayer will be exempt from criminal prosecution
- 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 amount to 10%.
3. Taxpayers will be required to disclose all income earned on assets since 1 March 2010 and will be taxed on the higher of the investment returns earned and 50% of the maximum value of assets during the period (known as the “seed capital”).
4. Offshore trusts are excluded from the SVDP unless the taxpayer deems the income earned by an offshore trust to be included in their taxable income.
5. Prior to submitting an application, taxpayers are able to submit an anonymous application in order to assess the potential liability.
6. Assets identified due to the “HSBC leaks” and the “Panama Papers” are excluded from the SVDP.
Graeme SaggersNolands SA, Cape Town, South Africa
T: +27 21 658 6600
Graemeis the National Tax Partner for Nolands.He obtained his BCom (Hons) degree at Rhodes University and qualified as a Chartered Accountant in 2009 after completing his articles at KPMG.He joined Nolands in 2011 as an Audit Manager and was appointed as the Tax Director at Nolands in September 2014.
Nolands SA is a national auditing firm, with ten offices located in all major centres in South Africa, Zimbabwe and Mauritius, employing almost 200 people focused on providing the best possible solutions for its clients. Nolands prides itself on being “out of the ordinary” and its ability to integrate services and respond rapidly to clients’ needs.
Published: October 2016 l Photo: Colourbox.de