What is the SVDP?
The Special Voluntary Disclosure Programme (SVDP) was for taxpayers who want to disclose their offshore assets and income. In line with the new automatic exchange of information between tax authorities, SARS started receiving offshore third party financial data from other tax authorities in 2017. Taxpayers who have undisclosed assets abroad had a limited window period which started on 1 October 2016 and closed on 31 August 2017 to disclose their foreign assets and apply for relief. Applications window period now closed.
What is the difference between VDP and SVDP?
The main differences between the Voluntary Disclosure Programme (VDP) and the SVDP are:
|Target audience||South African taxpayers with tax defaults in respect of any tax types administered under the Tax Administration Act, disclosures may include defaults on foreign taxable income.||South African taxpayers with offshore assets and income|
|Period available||Ongoing||1 October 2016 – 31 August 2017 – closed for applications.|
|Application||VDP01 form via eFiling|||
Why should I apply for the SVDP?
There are several benefits to individuals and companies if they apply for the SVDP:
- Relief will be granted under the SVDP:
- Only 40% of the highest value of the total of the aggregate of all assets outside South Africa derived from undeclared income and accumulated between or deemed to be between 1 March 2010 and 28 February 2015 will be included in the taxable income and subject to tax in South Africa.
- The undeclared income that originally gave rise to the assets mentioned above will be exempt from income tax, donations tax and estate duty liabilities arising in the past. However, future income will be fully taxed and assets declared will remain liable for donations tax and estate duty in the future, should the applicant donate these assets or pass away while holding them.
- Interest on tax debts arising from the disclosure will commence only from the 2015 year of assessment.
- Investment income and other taxable events prior to 1 March 2015 will be exempt from tax. (Future investment income will be subject to tax)
- No understatement penalties will be levied where an application under the SVDP is successful.
- Other SARS administrative non-compliance penalty relief – The same as current VDP.
- Where an application under the SVDP is successful SARS will not pursue a criminal prosecution in that particular case.
Please Note: If you need to apply only for tax relief, you must complete the VDP application form (VDP01).
|What does SARS want to achieve with the SVDP?||The SVDP aims to encourage non-compliant taxpayers to come forward on a voluntary basis to disclose their offshore assets and thereby regularising their tax affairs in this regard.|
|Who may apply for SVDP?||Individuals and companies. Settlors, donors, deceased estates or beneficiaries of foreign discretionary trusts may participate if they elect to have the trust’s offshore assets and income deemed to be held by and accrued to them. Taxpayers who disposed of any foreign assets prior to March 2010 may also apply for relief under the SVDP. Special deeming provisions will apply in this regard.|
|Who may not apply for SVDP?||Persons who have been given notice of the commencement of an audit or criminal investigation in respect of foreign assets or foreign income may not apply. Where SARS has obtained the information under the terms of any international exchange of information procedure prior to a disclosure. Disclosures where it is argued that all or part of the seed money/subsequent deposits/funding of foreign assets are not taxable in South Africa or have already been taxed in South Africa. The normal VDP channel remains open for disclosures of this nature. Trusts.|
|Are there any requirements for a valid SVDP application?||Yes. Refer to requirements under section 227 of the Tax Administration Act
The disclosure must: Be voluntary Must involve a default which has not occurred within five years of the disclosure of a similar default by the applicant Must be full and complete in all material respects Involve a behaviour referred to in column 2 of the understatement penalty percentage table in section 223. Not result in a refund due by SARS Be made in the prescribed form and manner
|Are there any documentary requirements for a valid SVDP application?||Yes. The following supporting documents must accompany the applications to determine the amount for tax purposes Values of the asset(s) must be completed in a table format and submitted together with the VDP01 application form – See the SVDP Guide; Documentation in evidence of the existence of the foreign asset (e.g. bank account details, property registration papers); Confirmation of the date on which the asset was acquired (e.g. letter from the bank in case of a bank account, shareholder certificates, property registration papers); Nature of the applicant’s connection to the asset (e.g. owner, director, shareholder, beneficiary); A description of the structure that was utilised to establish or acquire the foreign asset; Power of attorney (where required).|
|What relief is offered if the tax SVDP is successful||The undeclared income that originally gave rise to the foreign asset will be exempt from income tax, donations tax and estate duty liabilities arising in the past. Only 40% of the highest value of the aggregate of all assets situated outside South Africa between (or deemed to be between) 1 March 2010 and 28 February 2015 that were derived from undeclared income will be included in taxable income and subject to tax in South Africa in the 2015 tax period. Investment earnings & other taxable events prior to 1 March 2015 will be exempt from tax Interest on tax debts arising from the disclosure only commence from the 2015 year of assessment No understatement penalties will be levied 100% relief of an administrative non-compliance penalty that was/may be imposed excluding a penalty imposed for the late submission of a return. SARS will not pursue criminal charges for the tax offence arising from the disclosure.|
|Do I convert the foreign currency amounts to South African rand. How and when. ||Yes. The value for tax relief purposes is the market value determined in the relevant foreign currency translated to South African Rand at the spot rate at the end of the tax period in which the highest value fell.|
|What happens if my application is approved?||An agreement is concluded between SARS and the applicant that reflects the outcome of the application process.|
|What is the window period for SVDP?||Applications for relief under the SVDP will apply for a limited window period starting on 1 October 2016 and closing on 31 August 2017; Applications submitted prior to 1 October 2016 or after 31 August 2017 will be processed under the normal VDP rules, i.e. the SVDP rules cannot be applied. The window period began on I October 2016 and closed on 31 August 2017.|
|Can I object and appeal against a VDP assessment?||No. The SVDP assessment gives effect to the SVDP agreement, and typically includes the disclosed additional taxable income and, interest and certain non-waivable penalties. An SVDP assessment is not subject to objection and appeal.|
|Can I request a remission of interest and/or penalties raised in a SVDP assessment?||No. The interest and penalties form part of the SVDP agreement as well as the SVDP assessment, both of which are final and binding.|
|What must I do if I have made application for SVDP?||The following are important to note:
It is not necessary to request re-confirmation of SVDP applications for both tax related and exchange control SVDP applications. If the eFiling system recognised the applications, then the application is on the SVDP register and will be processed. You will receive two acknowledgements of receipt for the separate applications. Tax-related disclosures will be routed to SARS staff and exchange control contravention disclosures will be routed to SARB staff. The applicant will be contacted when the tax related SVDP application is allocated to a SVDP evaluator for processing. Additional or outstanding supporting documentation can then be submitted. A tax related SVDP application can at any time be cancelled by sending an email to [email protected] Corrected or amended tax returns that related to a SVDP application can be submitted to SARS through normal channels at any time before the SVDP application is processed. If the return is assessed by SARS before the SVDP application is processed, understatement and non-compliance penalties that are eligible for SVDP relief will be waived when the SVDP application is processed and a SVDP agreement concluded No late submission penalties or interest are eligible for SVDP relief; these must be paid on assessment.
|What are the contact details for tax related SVDP applications. ||Telephone number: 0800 864 613
Web Address: www.sars.gov.za
Email Address: [email protected]
Street Address: VDP Unit, South African Revenue Service,
Gramick Office Park,
281 Middel Street, Brooklyn,
Postal Address: VDP Unit: South African Revenue Service;
Private Bag X 923;
|What are the contact details for Exchange Control SVDP applications||Telephone number: 012 313 3951
Web Address: www.resbank.co.za
Email Address: [email protected]
Street Address: FinSurv SVDP Unit, South African Reserve Bank,
370 Helen Joseph Street (formerly Church Street),
Postal Address: SVDP Division; South African Reserve Bank;
P O Box 3125;
|Will advisors, Practitioners and other intermediaries be required to report on any details of SVDP applications||Please refer to the guidelines as published by FIC and IRBA.|
Quick Link to SARB
Although the application form is only available under eFiling, the documents in the block below are of importance to you.
|Guide Document Type||Description|
|Guide||Voluntary Disclosure Programme Guide|
|Guide||Special Voluntary Disclosure Programme Guide|
|Guide||Draft Guide: Special Voluntary Disclosure Programme (v1.2)|
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