Government’s tax amnesty unit will not be able to process all the tax amnesty applications before the end of this year with an anticipated ”flood” of applicants possibly even resulting in an extension to the November deadline.
This is according to advocate Willem Heath, a member of the partnership Amnesty Solutions, which was set up to advise South Africans on whether or not they qualified in terms of the Exchange Control Amnesty and Amendment of Taxation Laws Act.
Said Heath: ”The problem is absolutely huge. We anticipate the amnesty unit will be so flooded with applications they will not be able to finish looking at them until April or May next year.
”We think the unit will reach a stage where it will also have to consider extending the deadline.”
The amnesty legislation will allow individuals, close corporations and trusts to apply — until November 30 — for amnesty from civil and criminal prosecution for illegally moving money abroad in the past.
The amnesty is also open to a small class of facilitators, such as wholly-owned companies, who actively assisted individuals to shift funds offshore.
According to Heath, part of the reason why the unit would have to extend its mandate was that people left things until the last minute.
”Apart from this, people are legally required to substantively prove the value of their assets, amounts etc. With so much evidentiary material required from overseas, it could cause a lot of delays.”
He said that the Amnesty Solutions partnership had made representations to a number of applicants throughout the country, with his experience indicating that ”there were more individuals than close corporations or trusts” involved in having offshore assets.
”Billions of rands are involved … with individual transactions ranging from R800 by a widow to millions of rands.”
Heath said they have experienced, in many instances, a resistance to the process, because people ”don’t trust the state” and fear that once the state had the information they ”will abuse the situation and even amend the legislation and take penal action”.
This was despite the fact that members of the amnesty unit were bound by secrecy provisions and information could not be used for investigation.
According to his observations, Heath said that 25 % of applicants were ready to apply for amnesty, 30% had serious doubts and the balance were not going to apply.
”This is dangerous, because if people don’t apply they could get into serious trouble. The South African Revenue Service and Reserve Bank will take definite action. Banks, attorneys and financial advisers are now obliged to report any suspicious transactions, particularly after November 30, which means the rope is
tightening,” he said.
According to the legislation, those wishing to repatriate assets would be charged a 5% levy. Applicants choosing to keep the money offshore would pay a 10% levy.
Heath said there were a number of scenarios emerging of how people siphoned off money overseas. Three typical examples included one scenario where people unlawfully took money out of the country pre-1994 with the view of ”making provision for the future.”
The second scenario involved false invoicing, where money was taken overseas and left there so that no tax was paid on it. The third and the most common example was where entire families took over their permissible allowances for a holiday trip, and left it there as an investment instead of bringing the funds back to South Africa.
Meanwhile, amnesty unit chairperson advocate Mbuyiseli Madlanga said thus far the unit had received ”over 600 applicants” and expected this to increase.
Asked about concerns the public had about possible penal punishment, Madlanga said the public must be assured that the process was ”not a witch-hunt”.
”The [amnesty] criteria are simple and fairly easy to meet, and once the criteria are met, it is obligatory for the unit to give amnesty. There is no question of applying discretion,” he said.
He did not want to hazard a guess on whether the November deadline would be extended, appealing to those ”prospective” applicants to come forward now while they had a chance. — Sapa