South African Revenue Services (SARS) administers a voluntary disclosure programme under the Tax Administration Act for (only) tax non-compliance. South African Reserve Bank (SARB) has a less formal voluntary disclosure programme for (only) exchange control contravention. These two programmes are not coordinated. 

South Africa and 93 other jurisdictions are signatories to the Convention on Mutual Administrative Assistance in Tax Matters, a convention that regulates information exchange between signatories regarding tax matters. SARS is committed to commence exchange of information automatically on a wider front from 2017 and persons ‘under the radar’ may well have reason for concern. 

Who will qualify for the Amnesty? 

  • Persons already ‘above the radar’ and trusts will not be allowed to apply.
  • Others will be allowed to submit applications, from 1 October 2016 until 31 March 2017; and settlors, donors, deceased estates, and beneficiaries of foreign discretionary trusts may apply, provided they elect to have the trust’s offshore assets and income deemed (for tax purposes) to be held by them personally. 

The relief will be designed to approximate what would have been payable as tax but for the tax non-compliance and trust structures, with – 

  • Investment returns prior to 1 March 2010 to be exempt;
  • Interest to be levied from 1 March 2010 on 50% of previously undeclared ‘seed’ money for the offshore investment; and
  • A (percentagewise) modest add-on (depending on the specific facts). 

At least, SARS will ‘waive’ understatement penalties and criminal prosecution. 

The media statement is clear regarding the exchange control ‘charge’: 

  • 5% of market value if the cash is repatriated to South Africa; and 10% if it is not.
  • The ‘charge’ must be paid from foreign-sourced funds, alternatively there will be a 2% of market value add-on ‘charge’.

The question of whether (or not) to apply for the Amnesty is not primarily about tax or money. It is about personal risk. Anyone who should apply, and does not, or someone who applies and fails to achieve amnesty, may find mere financial impoverishment to be the lesser concern. There may be the real risk of criminal prosecution.

The decision of whether (or not) to apply for the Amnesty, and the actual application, will require some delicacy. Inevitably, a potential applicant (and his or her advisors) will have to ‘repatriate’ to South Africa and deal with some sensitive information. Under the common law rule of legal advice privilege, communications (including exchanges of documents) between legal practitioners and their clients are protected from disclosure, provided that certain requirements are met. A 2015 amendment of the Tax Administration Act endeavoured to erode the legal advice privilege in tax matters, but not by much. A potential applicant for the Amnesty will be well advised to consult with a duly experienced and qualified legal practitioner. 


Jerome Veldsman – Talking Point News (Walkers 2016)