Commencing on 1 November 2010 and until 31 October 2011, a voluntary disclosure program (VDP) has been introduced. This will enable taxpayers to put their tax and exchange control affairs in order.

Under the voluntary disclosure program, should a taxpayer have any tax liabilities that have not been declared correctly to SARS they can come clean with no penalties, additional tax or interest being charged. This applies to all types of taxation i.e. income tax, vat, paye, customs duties etc.

There will also be an opportunity for regularising any contravention of exchange control where South Africans have undisclosed foreign funds.

Under the voluntary program, undisclosed funds will be subject to a levy of 10% (if levy is paid from foreign funds), and 12% (if paid from local rand funds). This levy is not however payable if the funds are below the amount of unutilised foreign capital allowance which is at present R 4 mil per taxpayer.

i.e. undisclosed foreign funds R 3 500 000, unutilised foreign capital allowance R 4 000 000 thus no levy payable.

In terms of this arrangement under normal situations the taxpayer will need to pay tax on any income earned on the undisclosed funds back going five years.

There will also be an opportunity for certain persons to make a declaration on foreign assets that will not attract a levy of 10%/12%.

The proposal also provides for disclosure and regulasation of other foreign exchange matters that have not been correctly handled which includes:

With most governments around the world trying to destroy tax havens and thus increase tax revenues, growing sharing of tax information, this is an opportunity to regularise tax and foreign exchange affairs. Just for interest sake voluntary Disclosure programs are happening as have recently happened in 39 other countries worldwide. We can assist clients with all aspects of this Voluntary Disclosure Program (VDP).