In the 2018 budget speech it was announced that by the end of March 2018, Sars would have collected an amount of only R3 billion from the Special Voluntary Disclosure Programme (SVDP). While this may yet change, the final figure is likely to be well below the R10 billion as estimated by the Davis Tax Committee.
During April 2016 the “leaked” Panama Papers identified about 1 700 South African taxpayers holding offshore accounts that may not have been disclosed to Sars, with the assets held abroad reportedly running into billions of rands.
In order to provide taxpayers with an opportunity to regularise any previous undisclosed income, Sars introduced the SVDP. At the time of the introduction of the SVDP it was hoped that the tax revenues resulting from the programme would substantially reduce the shortfall in the national budget.
Many South Africans were, however, quite reluctant to proceed with the regularising of their affairs under the SVDP due to the complexity of the application process and the hefty penalty that they would pay to Sars equating to income tax on 40% of the highest assets value of their offshore assets.
When former finance minister Pravin Gordhan provided an update on the SVDP programme in the 2017 budget speech, it looked optimistic, as Sars had already received disclosures from taxpayers of R3.8 billion in foreign assets, with the yield from tax collection amounting to about R600 million. It was anticipated at the time that the collections would be significantly greater.
In a press release sent out on October 10 2017, Sars thanked more than 2 000 taxpayers who had made use of the SVDP. At the time, Sars reported having collected total taxes of just over R1 billion (up from R600 million received as at February 22 2017).
The value of applications that will be processed after March 2018 is not known. It is unclear as to whether the total that the SVDP will yield will be near the anticipated R10 billion. The levies payable by applicants under the Exchange Control leg of the SVDP have not yet been disclosed.
A question must however be raised – if there were 1 700 taxpayers with foreign assets abroad who were named in the Panama Papers, and Sars received 2 000 applications from taxpayers as part of the SVDP, could they have generated more income and regularised more foreign assets from South African taxpayers if the process was simpler and the “penalty” for submitting an application were less punitive? We will need to wait for the final report to see what Sars was able to collect as a result of this programme.
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