Time run­ning out to de­clare your undis­closed off­shore as­sets

Weekend Argus (Saturday Edition) - - FRONT PAGE - MARTIN HESSE

THE South African Rev­enue Service (Sars) re­minds you that, if you have undis­closed as­sets over­seas, you have un­til the end of this month to dis­close them un­der its Spe­cial Vol­un­tary Dis­clo­sure Pro­gramme (SVDP).

The pro­gramme, which came into ef­fect in Oc­to­ber last year, is “a win­dow pe­riod for in­di­vid­u­als and com­pa­nies to reg­u­larise undis­closed or unau­tho­rised for­eign as­sets and as­so­ci­ated in­come”.

If you don’t come clean, Sars is likely to catch up with you sooner rather than later.

Un­der the new global Com­mon Re­port­ing Stan­dard for the au­to­matic ex­change of in­for­ma­tion be­tween tax au­thor­i­ties, Sars says that, from Septem­ber, it will reg­u­larly re­ceive fi­nan­cial data about third par­ties from other tax au­thor­i­ties; hence the win­dow pe­riod to the end of this month.

In a re­cent blog, An­drew Well­sted, a di­rec­tor of law firm Nor­ton Rose Ful­bright and the head of its tax team, says: “There have been a num­ber of sim­i­lar op­por­tu­ni­ties to reg­u­larise tax and ex­change-con­trol af­fairs in the past. We have seen two pre­vi­ous spe­cial amnesty op­por­tu­ni­ties – in 2003 and 2010 – and the per­ma­nent Vol­un­tary Dis­clo­sure Pro­gramme (VDP), which came into force on Oc­to­ber 1, 2012 and which does not have a ter­mi­na­tion date. The cur­rent SVDP is the lat­est spe­cial op­por­tu­nity.

“Each amnesty or dis­clo­sure pro­gramme since 2003 has been more oner­ous com­pared with the pre­vi­ous op­por­tu­nity,” Well­sted says. “While the cur­rent SVDP deal is not at­trac­tive to many ap­pli­cants, it is un­likely that they will get a more favourable op­por­tu­nity in fu­ture.”

Well­sted says there is pres­sure on ju­ris­dic­tions around the world to fight tax eva­sion.

“The For­eign Ac­count Tax Com­pli­ance Act, the Com­mon Re­port­ing Stan­dard and other in­ter-gov­ern­men­tal agree­ments mean there will be a free flow of fi­nan­cial in­for­ma­tion be­tween ju­ris­dic­tions shortly. Un­der the Com­mon Re­port­ing Stan­dard alone, 101 ju­ris­dic­tions have agreed to start au­to­mat­i­cally ex­chang­ing fi­nan­cial-ac­count in­for­ma­tion, with over 1 300 re­la­tion­ships now in place.

“The so­cial me­dia and in­for­ma­tion age is also mak­ing it in­creas­ingly more dif­fi­cult to hide ac­counts from Sars or the South African Re­serve Bank,” Well­sted says.

The al­ter­na­tive to tak­ing ad­van­tage of the SVDP is run­ning the risk of be­ing caught. If you are, the penal­ties will be far more oner­ous and there is also the pos­si­bil­ity of crim­i­nal pros­e­cu­tion.

Well­sted ad­vises tax­pay­ers to take ad­van­tage of the op­por­tu­nity af­forded by the SVDP and to seek ex­pert help.

“The SVDP is a com­plex process, and it is im­por­tant that the sub­mis­sion is ac­cu­rate and com­plete to achieve the ben­e­fits.”

For a de­tailed ex­pla­na­tion of what the SVDP re­quires, and how it dif­fers from the con­cur­rent VDP, go to www.sars.gov.za > Le­gal > Vol­un­tary dis­clo­sure pro­gramme > SVDP page

martin.hesse@inl.co.za

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