Budget 2016: New amnesty for tax dodgers with offshore assets

A new amnesty will allow tax dodgers to come off relatively lightly – if they fess up between October 2016 and March 2017.

“Time is now running out for taxpayers
who still have undisclosed assets abroad,” Finance Minister Pravin Gordhan
warned in his budget speech yesterday, before announcing the so-called special
voluntary disclosure programme which will give non-compliant taxpayers an
opportunity to voluntarily disclose offshore assets and income. It will also
offer relief in light of exchange control contraventions.

Addressing the media on Wednesday, Gordhan
said the programme offered an opportunity for people to become “a little more
honest than they were before … and share a little more of their money with us”.

The pressure is on for those who have
undisclosed assets abroad as a new global standard for the automatic exchange
of information between tax authorities will be operational from 2017 – and will
provide the South African Revenue Services (Sars) with additional information.

Gordhan could not put a number on the
potential value of assets offshore but it likely runs into the billions, given
that another amnesty in 2003 – as Business
Day
reported – resulted in R48-billion found to be held offshore illegally.

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
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.


Search

Advertisement


Sponsored Ad

Get the new Eazy Bookings Android app NOW!!! Book Flights, Cars and Accommodation on your Android Phone/Tablet.
Download Now

Advertisement