The tax amnesty on undeclared foreign assets, which the government had hoped would yield billions of rand in additional revenue, has been a flop, reports local newspaper Business Live.
To date, the South African Revenue Service (Sars) has handled just 499 applications since the programme was launched on 1 October 2016, amid complaints that the system is unfriendly and expensive.
Sources suggest that the SVDP will only bring in a tenth of the nearly ZAR40bn (£2.4bn, $3bn, €2.6bn) the government had hoped.
Time will tell
“In line with Sars’s experience with previous deadlines, it is anticipated that the number of applications will increase significantly in the closing weeks of the SVDP window,” Sars spokesperson Sandile Memela said, reports local news site Moneyweb.
So far, offshore bank accounts and property have been the most commonly declared assets.
Memela said: “Sars will gain a better appreciation of the extent of offshore assets held from September 2017 onwards when the automatic exchange of information under the Common Reporting Standard (CRS) for early adopters [comes in] and in 2018 when automatic exchange of information commences for additional jurisdictions.”
The SVDP was launched to allow South Africans to regularise their tax status ahead of the introduction of the CRS.
From September, South Africa will start receiving third-party financial data from other tax authorities on a regular basis, which will make it more difficult for people to hide offshore assets.
Once the SVDP ends, Mamela said that taxpayers with undisclosed offshore assets will be subjected to full taxation, full interest, no relief from penalties and no relief from potential criminal prosecution.