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Notes on the Financial Surveillance Special Voluntary Disclosure Programme process

November 2017

South Africa

The Financial Surveillance Special Voluntary Disclosure Programme (the FinSurv SVDP) was announced by the Minister of Finance in the February 2016 Budget Speech.

The FinSurv SVDP kicked in on 1 October 2016 and ended on 31 August 2017.

Applicants could elect to retain the previously unauthorised foreign assets abroad against the payment of a 10% levy or to repatriate the unauthorised foreign assets against the payment of a 5% levy.

The total amount to be repatriated, including the relevant FinSurv SVDP levy, must be repatriated in foreign currency into the South African bank account of the applicant and the South African Authorised Dealer concerned must convert such funds at the ruling spot exchange rate. The rand proceeds of the levy portion must then be paid by such Authorised Dealer to the designated account of FinSurv held with the Corporation for Public Deposits. 

It should be noted that the Authorised Dealer must reflect the name, surname and FinSurv SVDP reference number and that no costs or commissions may be deducted from the levy amount to be paid. The Authorised Dealer involved must, furthermore, confirm the payment of the levy to the FinSurv SVDP Unit in terms of a prescribed form.

On approving the application for administrative relief in terms of the provisions of Exchange Control Regulation 24 under the Special Voluntary Disclosure Programme, applicants will be advised that foreign assets retained abroad may not be placed at the disposal of any third party normally resident in South Africa without prior FinSurv approval. Furthermore, such retained foreign assets may not be utilised to enter, via an offshore structure, into a transaction or a series of transactions to directly or indirectly acquire shares or other interests in a Common Monetary Area (CMA) company or a CMA asset. Similarly, such retained foreign assets may not be introduced into the CMA as a loan to a CMA resident. The CMA member countries consist of South Africa, Lesotho, Namibia and Swaziland. 

In view of the fact that in excess of 30 000 applications were received by the FinSurv SVDP Unit, 80% of which were submitted during the months of July and August 2017, the small FinSurv SVDP Unit estimated that it would take the months of September and October 2017 to merely download the applications and annexures. They, accordingly, anticipate that the adjudication process, on a first in first out basis, could then take another six to eight months or even longer to be attended to. 

As a result of the abovementioned anticipated delay in the adjudication process, the FinSurv SVDP Unit issued a Notice on 11 September 2017 advising applicants that they should wait until they receive the written instructions from the FinSurv SVDP Unit before any unauthorised foreign assets and/or levies are repatriated to South Africa. 

The FinSurv SVDP Unit has, however, indicated that they will entertain email requests to repatriate unauthorised foreign assets in emergencies, such as to utilise the funds to effect payment of tax levies. Applicants will have to motivate such requests and the approval granted will be subject to repatriation and reporting conditions, which must be strictly complied with. 

South African residents, who missed the 31 August 2017 deadline, may still voluntarily regularise their unauthorised foreign assets outside of the FinSurv SVDP, but the percentage of the levies could range from 10% to 40%.

South African residents with unauthorised foreign assets, who do not voluntarily approach the Financial Surveillance Department for assistance and regularisation, may face the full force of the law, including recovery of the full amount of the contravention. 

Certain non-compliance issues, such as foreign inheritances, can still be regularised without levies in some instances. 

Full, frank and verifiable disclosure will be required, supported by recent documentary evidence confirming the current value of the unauthorised foreign assets.

 

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