Amnesty by any other name…
A second round of relief planned around November this year
THE SOUTH AFRICAN RESERVE BANK (“SARB”) recently issued a Memorandum on the objectives of Regulation 24 and the Voluntary Disclosure Programme (“VDP”), which appears on the SARB website.
This follows a Treasury media statement dated 10 May 2010, releasing a draft of the 2010 Second Taxation Laws Amendment Bill (“2TLAB”) for public comment, which gives effect to the 2010 Budget tax proposals.
The Treasury public comment period ended 11 June, while the SARB portion closed on 2 August 2010. The tax commu- nity is now waiting for amendments to be made and the consequent launch by (hopefully) 1 November 2010 and will expire on 31 October 2011.
On the face of it, there seem to be many similarities with the 2004 Income Tax and Exchange Control Amnesty offered to noncompliant taxpayers and those who were in breach of Exchange Control Regulations.
But Anton Maskowitz from RMB Private Bank’s International Advisory Services says that the VDP is not a second tax amnesty that waives all tax liabilities. “The mechanism would provide qualifying taxpayers with amnesty against tax penalties and interest arising from previous defaults,” he says.
Another major distinguishing factor from the 2004 Amnesty is the fact that SARB and the South African Revenue Service (SARS) have now issued their respective proposals separately.
“Previously, if South African residents declared foreign assets, relief was given on all interest and exchange control penalties and taxes. Now, no tax relief will be given. However, interest and penalties on outstanding tax liabilities will be waived,” says Maskowitz. “A penalty for Exchange Control breaches will be levied, but no further Exchange Control action will be taken.”
The accompanying table compares the proposed VDP to the 2004 Amnesty and attempts to highlight the apparent main differences based on the information available in the draft legislation.
As it currently stands, a defaulting taxpayer will only be granted relief under the programme, provided SARS was not aware of the default; a penalty or additional tax would’ve been levied had SARS discovered the default; and the full disclosure is made.
SARS has defined a “default” to be the submission of incorrect information or the failure