South Africa Revises New Voluntary Disclosure Program
Friday, July 22, 2016
The South African National Treasury and the South African Revenue Service (SARS)
are inviting further comments on the details of the special voluntary disclosure
program (SVDP) that was announced on February 24 in the 2016 Budget.
With the 2017 deadline for the international exchange of tax information through
the OECD's Common Reporting Standard in mind, the 2016 Budget specified that
additional relief will be offered to non-compliant taxpayers to voluntarily
disclose their offshore assets and income. The SVDP will run for
six months from October 1, 2016, to March 31, 2017.
Following additional amendments after previous consultations on the 2016 Draft
Rates and Monetary Amounts and Amendment of Revenue Laws Amendment Bill and
the 2016 Draft Rates and Monetary Amounts and Amendment of Revenue Laws (Administration)
Bill, which contain details of the SVDP, comments on the revised drafts are
now requested by close of business on August 8, 2016.
To simplify the SVDP, the amendments now include 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.
Persons may not apply for the SVDP if they are aware of a pending audit or
investigation in respect of foreign assets or foreign taxes, or if such an audit
or investigation has commenced. In addition, amounts in respect of which SARS
has obtained information under the terms of any international exchange of information
procedure will not be eligible for the SVDP.
Any non-compliance with respect to value-added tax, pay as you earn (PAYE) tax, unemployment insurance
fund contributions, and skills development levies will not qualify for the SVDP.
However, relief for penalties associated with non-compliance with these taxes
will continue under the existing voluntary disclosure program in terms of the
Tax Administration Act, 2011.