Sars gets R1bn revenue boost from undeclared offshore assets

The South African Revenue Service (Sars) has collected slightly more than R1 billion from the Special Voluntary Disclosure Programme (SVDP) in 2016.

Taxpayers with undeclared offshore assets and income were offered a window to come clean by voluntary disclosing tax and exchange control defaults.

Sars said in a statement released on Tuesday more than 2 000 made use of the programme, which ran from October 2016 to the end of August this year.

The main reason for offering the opportunity was the introduction of the automatic exchange of information (AEOI) between tax authorities in September this year.

The agreement will ensure that banks and financial institutions exchange information of account holders in their jurisdictions with the South African tax authorities.

South African banks and financial institutions will also report information about foreign account holders to Sars, who will share this information with signatories of the agreement.

Sars said 2 018 applications have been tallied, which has assisted Sars in collecting over R1 billion in revenue. The total tax liability stands at R1.18 billion.

Finance minister Malusi Gigaba earlier estimated the potential tax income from the SVDP at R4 billion.

Keith Engel, CEO of the South African Institute of Tax Professionals, said the number was collected from a few big players who came forward.

“That said, the take-up probably could have been higher but for certain weaknesses in the amnesty,” he added. He suggested that the SVDP should have just been an improved version of the amnesty in 2003 in order to save time and hassle.

“The new regime was more complex, requiring more paperwork. The net result was many found the five-year review of documents too much of a hassle.”

Engel is also of the opinion that the amnesty was strict in terms of advisors. “Accountants had to come forward as a whistleblower if they interviewed a client and did not pursue the amnesty (SVDP application). This meant that accountants were cut out of the loop.”

Most people use accountants as their tax advisors.

Engel said it is questionable whether Sars has the capacity to enforce and uncover “hidden” offshore savings. However, the exchange of information networks among countries are growing in effectiveness. This will assist Sars in finding the still undeclared assets and income.

Those who have not applied for offshore tax relief can still do so under the normal Voluntary Disclosure Programme (VDP) process.

Sars said the collected revenue provides a boost to Sars’ revenue purse “in a difficult economic period” and will assist the country in its socioeconomic development.

Spokesman Sandile Memela said applications continue to be processed by the VDP team existing of law, tax and finance experts.

The outcome will be known in due course, latest by the end of the current financial year.

Brought to you by Moneyweb