The proposed tax amnesty for money illegally stashed offshore has received a warm response, and a ”significant” inflow of funds is expected, the Sars said on Tuesday.
”Initial indications are for a big take-up (of the amnesty),” South African Revenue Service Commissioner Pravin Gordhan told Parliament’s finance portfolio committee.
However, it was impossible to estimate exactly how much money would return to South Africa, he said. Finance Minister Trevor Manuel announced in the 2003/04 Budget last week that South Africans, who in the past illegally moved money offshore, would be allowed to repatriate the funds without facing prosecution, or civil penalties.
This is provided they apply for amnesty between May 1 and the end of October, and make a full disclosure of offshore income, assets and liabilities.
In return, the individuals will be expected to pay a five percent exchange control charge on money returned to the country, or a ten percent charge on assets left offshore.
Franz Tomasek of Sars’ law administration department said estimates for the extent of money held offshore had been anywhere from R20-billion to R80-billion, although one market player had suggested this may be extremely conservative.
”We are picking up that people want to come clean.”
It had become increasingly difficult to move money offshore or hold money in overseas accounts without raising the attention of that country’s tax authorities.
This was especially given the increased focus on international money laundering, and in particular, in the search for money used to sponsor terrorist activities.
He said Sars was aware of several vehicles used to transfer money offshore, and hoped, through the full disclosure stipulation, to gain a better understanding of other methods used.
Sars plans to set up a call centre to assist individuals with queries relating to the amnesty, and to compile a guide setting out the application form and procedures to be followed.
Draft legislation should be available for public comment by the end of this month.
Rhodes University economics Professor Matthew Lester told the committee that in his dealings with tax experts he had heard there had been ”a staggering reaction” to the amnesty announcement.
”Basically, the reaction is ‘we are going to come clean’.”
However, the success of the move would depend on how well the authorities convinced the public that there would be no witchhunt for those who had transgressed foreign exchange controls.
”We must make sure we get this right,” he said.
Gordhan responded that there was no question of a Sars witchhunt. The amnesty was about creating a new threshold regarding tax compliance in the country, although those that did not apply would face investigation ”like any other taxpayer”, he said. – Sapa