By Kezia Talbot, Legal Adviser, BDO Wealth Advisers
In the 2016/2017 Budget Speech, the Minister of Finance announced that a Special Voluntary Disclosure Programme (“SVDP”) would be launched, and that would run from the 1st of October 2016 until the 31st of March 2017. This SVDP would run concurrent with the permanent VDP and its particular purpose is to provide affected taxpayers with an opportunity to regularise unauthorised foreign assets.
In the period from the aforementioned Budget Speech to date, several developments have taken place, and, after public comment on the Bills, the legislation formalising the SVDP was at last, on the 18th of January 2017, enacted.
The Rates and Monetary Amounts and Amendment of Revenue Laws Act No. 13 of 2016 and the Rates and Monetary Amounts and Amendment of Revenue Laws (Administration) Act No. 14 of 2016, in their final form, have amended the draft SVDP provisions as announced in February 2016, in the following particular respects:
- Most notably, the applicable period for the SVDP was initially extended to 30 June 2017, and was finally extended to the 31st of August 2017;
- The amount to be included in the applicant’s income, for purposes of the income tax portion of the SVDP, was decreased from 50% to 40% of the highest value of all of the undisclosed foreign assets during the period 1 March 2010 and 28 February 2015, thereby making the SVDP more attractive to affected taxpayers;
- The legislature provided, in the income tax portion of SVDP, for a rebasing of the base cost of the disclosed assets for capital gains tax purposes, to the value of the asset as at the 28th of February 2015.
The extension of the application period for the SVDP is a welcomed amendment, as it is our experience that the volume of documentation and evidence which is required to be submitted in order to make an application under the SVDP is quite substantial. Applicants are therefore encouraged to consult with experts as a matter of urgency in order to begin the process of compiling the required documentation, and not to wait until the last moment, when they may find it impossible to make a full and proper declaration.
The Minister of Finance, in his Budget Speech on the 22nd of February 2017, confirmed that SARS has to date received disclosures under the SVDP of R3.8 billion in foreign assets, which are expected to yield a revenue of approximately R600 million.
It is clear that, in anticipation of the automatic exchange of information between international tax authorities, which is to begin in September 2017, and the aftershock of the so-called “Panama Papers’, affected taxpayers are indeed making use of the SVDP to regularise their undisclosed foreign assets. That being said, time is running out for the remaining affected taxpayers to take advantage of this last opportunity as the likelihood of escaping the net of resident taxpayers exposed during the course of automatic reporting and the like, is surely reducing.
SVDP is a relatively small price to pay for the peace of mind that you get knowing that you can use your offshore wealth without fear or reproach.
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