This was announced in the February Budget and has now commenced. From October 2016 to March 2017, South African residents will be able to once again apply for amnesty on so-called illegal offshore assets – ie those assets which have hitherto not been declared for Exchange Control or tax purposes.
The programme will see Sars and the South African Reserve Bank working jointly to ensure applications are assessed through one joint process for both tax non-compliance and exchange control contraventions.
The special programme extends from an existing voluntary disclosure programme that since 2012 has offered amnesty from fines and criminal proceedings for those who disclose assets offshore. Individuals and companies can initially apply for amnesty with a “no-name” approach and successful applicants will be granted a number of reliefs under the programme.
Only 50% of the seed money to fund the acquisition of offshore assets (before March 1 2015) will be included in taxable income and subject to normal tax.
Investment returns on these assets prior to March 1 2010 will be exempt from taxation.
Interest on tax debts arising from seed money or returns will only commence from March 1 2010.
No understatement penalties will be levied.
The successful applicant will also be exempt from criminal prosecution.
Exchange control relief, under the special programme, will allow South African residents to disclose and regularise their exchange control contraventions that occurred prior to February 29 2016.
Applicants may still have to pay a levy based on the market value of their foreign assets or structures.
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 be 10%.
Those who fully disclose after the deadline will pay a settlement ranging from 10% to 40% as decided by the Reserve Bank.
Those who don’t disclose could face the full force of the law meaning that, where appropriate, the Reserve Bank’s financial surveillance department can recover the full amount of the contravention.
Persons cannot apply for amnesty if they are aware of a pending or commenced audit or investigation in respect of foreign assets or foreign taxes. Amounts in respect of which Sars obtained information under the terms of any international exchange of information procedure will not be eligible for the special programme.
With greater inter government cooperation and the tax net closing world- wide, it is advisable to take advantage of this opportunity.