Seeking Hidden Offshore Assets

We live in a new world where through “automatic exchange of information” previously undisclosed assets (treasures) will be discovered by tax regulators.

SARS has introduced the Special Voluntary Disclosure Programme (VDP) to provide taxpayers with undisclosed foreign assets and income a final opportunity to regularise their tax affairs.

A ‘last chance’?

The timing of the special VDP is to enable taxpayers to be compliant before the new Organisation for Economic Cooperation and Development (OECD) global standard for the automatic exchange of financial information comes into effect in 2017. This information will be exchanged and supplied with Tax Regulators globally. Over 100 countries, including South Africa, have signed up for this information/data sharing which will be implemented by September 2017. In addition to countries, most tax havens and low tax jurisdictions have agreed to supply information.  This will make keeping undisclosed accounts a very risky approach. That is why this amnesty program is deemed as a final opportunity for tax evaders to make peace with SARS and SARB, before greater information sharing powers with overseas jurisdictions come into effect.

Some of the sanctions that would apply if your non-compliance is detected by SARS or SARB are:

SARS

  • 10% late payment penalty and 10% to 200% understatement penalty
  • Interest on outstanding payments
  • Could lead to potential criminal prosecution

SARB

  • A 10% to 40% penalty which is based on current value of the authorised asset, if you come forward outside of the special VDP.

Some relief that is proposed in the VDP Programme are:

SARS

  • Only 40% of the highest value of the aggregate of all assets situated outside of South Africa between 1 March 2010 and 28 February 2015 that were derived from undeclared income will be included in taxable income and subject to tax in South Africa in the 2015 tax period.
  • Investment earnings & other taxable events prior 1 March 2015 will be exempt from tax.
  • Any investment income and gains generated after the 1 March 2015 will be subjected to tax.
  • If the VDP application is successful then no understatement penalties will be levied and no criminal prosecution will be pursued.

SARB

  • As from 29 February 2016, unauthorised foreign assets will have a 5% penalty on the current value of the asset if the asset is repatriated to South Africa, and 10% if the assets are kept offshore.
  • A 2% penalty will be added if the original penalty is not paid from foreign source funds.

The duration of the special VDP

The special VDP will be effective from 1 October 2016 until 30 June 2017.

Why use Nolands?

Our experienced and qualified team has significant past experience in assisting clients with amnesty applications. We have good relationships with SARS and its VDP unit. Given the complexity, in the calculation in in the quantification of the liabilities and the accuracy of these calculations and navigating the VDP processes with finesse, we recommend that you contact

Contact Details

Graeme Saggers CA(SA), MCom (Tax)

Tax Director

@: graemes@nolandscpt.co.za

W: www.nolands.co.za

T: +27 21 658 6600