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FOREIGN EXCHANGE AND TAXATION
VOLUNTARY DISCLOSURE PROGRAM
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%.
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Immigrants undisclosed foreign assets prior to
immigration.
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Foreign inheritances and legacies received prior
to 17 March 1998.
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Foreign income earned prior to 1 July 1997.
The proposal also provides for disclosure and
regulasation of other foreign exchange matters that
have not been correctly handled which includes:
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Unauthorised foreign loans
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Management of approved investments
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Unauthorised foreign investments
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Loop structures
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Special rules for discretionary trusts.
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). | 
