Monday, August 15, 2016
The South African Revenue Service has issued a draft guide on the special voluntary disclosure program, which from October 1, 2016, will offer non-compliant taxpayers an amnesty on offshore assets and income until March 31, 2017.
The guide says the special voluntary disclosure program (SVDP) is intended to encourage taxpayers to come forward on a voluntary basis to regularize their tax affairs with SARS and avoid the imposition of understatement and administrative penalties. Relief is available in respect of all taxes administered by SARS (but excludes duties charged in terms of the Customs and Excise).
It is also confirms that any person may apply for voluntary disclosure relief. However, a person that is aware of a pending audit or investigation, or is the subject of a not-yet-concluded audit or investigation, may not use the scheme.
All voluntary disclosures must be made on the prescribed Voluntary Disclosure Application Form (VDP01). The VDP01 must be completed online and submitted via SARS eFiling.
The SVDP includes the calculation of only one amount to be included in taxable income and subject to tax in South Africa. That amount will be equal to 50 percent of the highest value of the aggregate of all assets held by a taxpayer outside South Africa between March 1, 2010, and February 28, 2015.
The undeclared income that originally gave rise to those assets will be exempt from income tax, donations tax, and estate duty liabilities that should have arisen in the past. However, future income will be fully taxed, and declared assets will remain liable for donations tax and estate duty in the future, should the applicant donate these assets or die while holding them.
Settlors, donors, deceased estates, and beneficiaries of foreign discretionary trusts may participate in the SVDP if they elect to have the trust's offshore assets and income deemed to be held by them. Taxpayers who disposed of any foreign-held assets prior to March 1, 2010, may also apply for relief under the SVDP, and special deeming provisions will apply in this regard.