COMMON REPORTING STANDARDS & THE AUTOMATIC EXCHANGE OF INFORMATION

The world has never been smaller for global citizens facing coordinated efforts by multiple countries to enforce Common Reporting Standards (CRS) and encourage the Automatic Exchange of Information.

South Africa is one of the 56 countries that will start proactively sharing investor information on 1 September 2017, with another 44 countries committed to start sharing information in 2018.

This means that investment product providers, banks, trust companies and other financial institutions will automatically report certain information to the tax authorities of the country in which an investment is held, as well as the country in which the holder of the investment is a tax resident. Information exchanged on Reportable Accounts will be:

a. the name, address, tax identification number and date & place of birth of each Reportable Person;b. the account number;c. the name and identifying number of the Reporting Financial Institution;d. the account balance or value as of the end at the relevant calendar year or, if the account was closed during such year or period, the closure of the account.

In light of this, South African taxpayers have one last opportunity to disclose foreign assets held in contravention of the relevant exchange control and tax laws.

“…we never really learn from the first mistake or the second or the third. It only hits us when we’re given the

last chance.” - Anonymous

THE SPECIAL VOLUNTARY DISCLOSURE PROGRAMME (SVDP)

The Special Voluntary Disclosure Programme (SVDP), that runs from 1 October 2016 to 31 March 2017, is being offered through a joint SVDP unit, combining forces from the South African Revenue Service (SARS), dealing with the relevant income tax defaults and the Financial Surveillance Department of the South African Reserve Bank (FinSurv), dealing with exchange control contraventions.

Where an applicant is eligible for relief, the income tax and exchange control application must be submitted through SARS’ e-filing portal. In the case of a ‘lesser misdemeanour’ for exchange control purposes, the application must be submitted through the applicant’s Authorised Dealer.

While the terminology used in the SVDP bill relating to income tax is slightly different from that of the exchange control circular, applicants envisaged for both will include:

• Individuals, including sole proprietorships;• Close corporations and companies;• South African trusts; • Deceased estates; • Insolvent estates; • Partnerships (each in their separate capacity for tax purposes).

The highly-skilled and experienced team within Geneva Management Group is perfectly positioned to guide any prospective applicant through the complete income tax and exchange control SVDP process.

Prospective applicants will be provided with relevant and objective advice, review of supporting information, completion and submission of applications and tracking of progress including finalisation of the SVDPadjudication process.

What are the possible consequences if I do not apply?Possible consequences of being found guilty of any contraventions are:

• Criminal prosecution• Imprisonment of up to a

maximum of 5 years. • A fine of up to 40% of

undisclosed capital.• Interests on any unpaid taxes

(currently 10.25%). • Understatement penalties of

up to 200% for intentional tax evasion.

• The names of convicted tax offenders may be published by SARS once all review and appeal proceedings have been completed.

Who can assist with my application?Applications can be made through a representative with the necessary power of attorney which, given the complexity of the tax and exchange control processes, is highly recommended.

What is a “lesser misdemeanour”?Lesser misdemeanours with regard to exchange control have a simplified application process and will not attract a levy. They include:

• Immigrants who have yet to declare their foreign assets;

• South African residents with foreign inheritances (prior to 17 March 1998);

• Foreign inheritances from a South African resident. Note that specific regulations apply to so-called “loop structures” and will have the effect that a full SVDP application must be made in certain instances;

• Foreign income (earned prior to 1 July 1997), not previously repatriated; and

• Corporate entities, with approved financial investments, that have not (prior to 29 February 2016) kept up to date in their ongoing reporting and disclosures of changes, can submit all outstanding documentation to become fully compliant with their obligations.

It is important that a client chooses the correct representative that is able to provide the necessary client privilege.

FREQUENTLY ASKED QUESTIONS

Ruaan van Eeden

Ruaan joined Geneva Management Group during 2016 and serves as the Head of Tax for the global group. He is highly experienced in tax dispute resolution, tax audits, advance tax rulings, voluntary disclosures (tax and exchange control), corporate and individual tax advisory, employees’ tax and VAT. Ruaan has been recommended for tax in The Legal 500 EMEA Series 2014 and ranked in Chambers Global 2016.

Between 2003 and 2006, he worked as a senior auditor within the National Enforcement Unit of the South African Revenue Service. He then joined Grant Thornton Chartered Accountants as a tax consultant in 2006 and was later promoted to tax consulting manager. In 2008 Ruaan joined Cliffe Dekker Hofmeyr as a senior associate and was promoted to partner in the Tax and Exchange Control department in 2011. He holds a Bachelor of Commerce degree in Accounting from the University of Potchefstroom.

Ruaan further completed postgraduate studies at the University of Johannesburg, where he obtained a Higher Diploma in Tax Law and a Master of Commerce degree in South African and International Tax.

About Global Capital Solutions

Global Capital Solutions provides a distribution model to asset managers and investment companies who do not have a footprint in South Africa or who prefer to outsource their marketing activities.

We aim to provide a range of niche products, suitable for the high net-worth investor. While GCS is a young company, the directors of the company have over 40 years of combined experience in the industry.

Our products and services include:

Contact us

206 Barry Hertzog Avenue www.globalcap.co.zaGreenside T | +27 11 486 10092193 info@globalcap.co.za

Global Capital Solutions is an authorised financial services provider. FSP Licence Number 1644

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