While typical international experience has shown that a successful tax amnesty could bring in about 10% of all offshore funds, Germany, which is also considering an amnesty, has said about a third of its estimated flight capital could be repatriated.
According to the South African Monetary Policy Review released Wednesday, this would boost tax revenues by 25-billion euros.
Finance Minister Trevor Manuel announced in his budget speech last February that the South African government will offer an amnesty from May 1 to October 31, 2003, for individuals with funds illegally held offshore wishing to bring them back to South Africa.
While there are no clear estimates as to the total amount of “illegal funds” held by South Africans offshore, figures of between R60-billion and R80-billion have been mentioned.
The review said that capital flight results in the exportation of domestic savings and foreign exchange from countries where they are generally in short supply, like South Africa.
The German government proposed amnesty calls for self-incrimination before the end of 2003, with a penalty rate of 25%, or before July 2004 with a 35% penalty rate.
In South Africa individuals would be subject to a 5% exchange control charge on funds repatriated back to South Africa, or to a 10% charge on any foreign assets remaining offshore.
A zero percent charge would apply for all assets that can be held legally offshore under the normal Exchange Control limits. – I-Net Bridge