On 9 July 2015, the South African Revenue Service (SARS) issued a media release too provide an update on the progress made by it on work done on foreign bank accounts held by South African tax residents. It states that SARS will provide such tax residents "an opportunity until 12 August 2015… to approach SARS via its Voluntary Disclosure Programme (VDP) to regularise their tax affairs."
Pursuant to the various February 2015 media articles that referred to the release of information pertaining to South African tax residents who are or were HSBC account holders, SARS has completed the initial phase of matching information obtained through international exchange of information procedures with the SARS taxpayer database. The SARS media release states that the matching of information has confirmed that certain account holders may have used foreign accounts to evade South African tax liabilities.
SARS has encouraged all South African tax residents who hold bank accounts in foreign jurisdictions to make use of the VDP process, which is provided for in the Tax Administration Act, 2011 by 12 August 2015 and have intimated that it will be in a position to "commence issuing audit notification letters from 13 August 2015".
In terms of the Tax Administration Act, a person may generally make use of the VDP until such time as the person has received an audit notification letter. Persons who are already under audit or investigation from SARS, or aware of a pending audit or investigation, will generally not qualify for the VDP.
In our view, the notice issued by SARS dated 9 July 2015 is not law and does not amend the provisions of the Tax Administration Act, 2011. In respect of the HSBC account holders who SARS is investigating, the media release indicates SARS' willingness to extend the VDP relief to such account holders if they disclose before 12 August 2015, notwithstanding the fact that it has commenced investigations against them. In respect of persons other than those whose names appear on the leaked list of HSBC account holders, until such time as a person has received an audit notification letter from SARS, that person may be eligible to submit a VDP application despite missing the 12 August 2015 deadline.
In regard to contraventions of the South African Exchange Control Regulations, an administrative regularisation procedure is also available, albeit informally. The Financial Surveillance Department of the South African Reserve Bank has not imposed a deadline by which voluntary disclosure of exchange control contraventions must be made. However, it would be prudent to submit an Exchange Control Regularisation application if a tax VDP application will also be submitted.