SPECIAL VOLUNTARY DISCLOSURE PROGRAMME (SVDP)
12 Sep 2016
As you will recall in the Budget Speech the Minister of Finance proposed a Special Voluntary Disclosure Programme (SVDP) to enable South African resident to regularise foreign exchange transactions and the income tax consequences arising therefrom.
An initial draft Bill was tabled with the Budget Speech.
Subsequent to that draft Bill being tabled a forum was established by National Treasury and SARS to discuss the matter with a number of practitioners.
PKF attended these discussions and gave significant input into the meeting.
Arising from this meeting a revised draft Bill has been issued by SARS fundamentally changing the nature of the disclosures required for income tax purposes.
The South African Reserve Bank has also issued its Regulation 24 Notice to bring effect to the SVDP for foreign exchange issues.
The Reserve Bank has also clarified those issues that require disclosure but will not have a penalty attached thereto.
SARS and National Treasury have requested further submissions on second draft SVDP Bill and PKF has once again made submissions in this regard.
SARS and National Treasury have, however, not called for further consultative meetings.
The parliamentary process has commenced and on 30 August 2016 PKF made a further submission on the SVDP.
One of the key areas of concern that has been highlighted by both PKF and other commentators is the need for an exemption from FICA for all those practitioners who consult on the SVDP, whether or not the client takes up the SVDP. Without such an exemption it would be incumbent upon the consultant to report the client in terms of the FICA Rules.
One of the other concerns raised by PKF and other commentators is the need for an exemption from the reportable irregularity provisions regulated by IRBA. Once again without such an exemption all companies that consult with their auditor will find themselves receiving a reportable irregularity letter and have qualifications on their financial statements.
Both of these exemptions existed at the time of the previous amnesties and there is no rational reason why they ought not to be in place at this stage. Without such exemptions clients cannot take advice on the process without placing themselves and their advisors at risk.
One of the other issues that has been highlighted in the discussions at Parliament is the need for greater simplicity in the disclosure process.
We all await the final versions that will emanate from Parliament as a result of the representations made both to SARS, National Treasury and to the Parliamentary Committee charged with the finalisation of these Bills.
Once these documents are finalised and once the necessary exemptions are in place for advisors we will certainly begin the process of advising clients to regularise their affairs.
With the changing world conditions and in particular with the common reporting framework the world is becoming a far smaller place. There is certainly a need to regularise one’s affairs and we have been at the forefront of those advisors who have over time made various representations to SARS and National Treasury to have a further amnesty to ensure that taxpayers can regularise their foreign assets and the tax implications arising therefrom.