RSM South Africa

A review of the Special Voluntary Disclosure Programme

The Minister of Finance announced the Special Voluntary Disclosure Programme (SVDP) in his February 2016 budget speech, following the new global standard for the automatic exchange of information between tax authorities. This announcement created an opportunity for non-compliant taxpayers, to voluntarily disclose offshore assets and income, regularising both their tax and exchange control affairs. Two regulatory bodies, the South African Revenue Service (SARS) and the South African Reserve Bank (SARB) would administer the SVDP, which was expected to yield a target of R10 billion in revenue collection.

According to a media statement issued by National Treasury on 24 February 2016, the programme was scheduled to run for a limited window period of six months effective 1 October 2016, and close on 31 March 2017. However, the closing date was first extended from 31 March 2017 to 30 June 2017 then from 30 June 2017 to 31 August 2017. In addition, taxpayers were reminded by SARS of the final submission date of 31 August 2017, despite previous extensions to the SVDP deadline due to the international automatic exchange of information set to begin in September 2017. The impact of South Africa entering into information exchange agreements with other foreign countries would mean the tax authority of a taxpayer’s country of residence can access offshore records, to verify whether that taxpayer has fully disclosed their foreign source income or assets.

Both regulatory bodies agreed to have the SARS e-filing platform as a single point of entry for applications. SARS issued letters acknowledging receipt of SVDP applications for tax and exchange control relief upon submission, referencing application and case numbers, but no expected turnaround time for processing was stipulated. In October 2017 SARS thanked over 2000 taxpayers who had made use of the SVDP and by March 2018, confirmed that R2.7 billion in revenue was collected under the SVDP.

In August 2018 the SARB was still processing applications in the 26 000 SVD reference number range and according to them a taxpayer could gauge, by application number, how close or far the SARB was from processing their application. Although the SARS website indicates an average turnaround time of 137 working days for SVDP cases, in practice there were instances of taxpayers waiting for up to 12 months or longer before receiving any feedback. The SARS website alludes to an unexpectedly high volume of applications received, resulting in their additional employ of resources to assist with the processing and to reduce the turnaround time.

The SVDP excluded persons from this programme who had been given notice of the commencement of an audit or criminal investigation in respect of foreign assets or foreign taxes. Due to the lack of alternative courses of action available to accelerate the processing of SVDP cases, many taxpayers were left in a state of panic, aggravated by media publications on the acceleration of the global exchange of information.

In conclusion, with the automatic exchange of information well under way, both the SARS and the SARB are still currently inviting taxpayers who missed the SVDP deadline to submit applications for relief post the SVDP. The channel for tax relief is use of the normal Voluntary Disclosure Programme (VDP), and those who wish to disclose their exchange control affairs can submit an application via an Authorised Dealer or directly with the SARB. SARS indicates that a VDP application is not voluntary where the applicant has been given notice of the commencement of an audit or criminal investigation related to the disclosed default. However, if a SARS official is of the view that the default would not otherwise have been detected given the circumstances and ambit of the audit or investigation, and that during the audit or investigation the application would be in the interest of good management of the tax system and the best use of SARS’ resources, the application is still considered voluntary.

Cynthia Gatsi

Tax Compliance Officer, Cape Town


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References:

2016 Finance Minister Budget Speech

SARS Special Voluntary Disclosure Programme Guide

SARS External Guide Voluntary Disclosure Programme

SARS media release 29 August 2017

National Treasury Media Statement 24.02.2016

Exchange Control Circulars No. 8/2016 and No. 4/2017

Davis Tax Committee Secretariat: Closing Report: March 2018

https://www.resbank.co.za

https://www.sars.gov.za