Supplementary Budget 2020

Volunteer disclosure could be Gordhan's Excalibur - expert

Johannesburg – The Special Voluntary Disclosure Programme (SVDP) which ends in August could prove useful in helping tax authorities in collecting much-needed tax revenue, says an expert.

At a pre-budget briefing this week, Beatrie Gouws, associate director of global mobility services and employment tax advisory at KPMG explained that the SVDP could be the “gamble” government should take in raising revenue.

READ: Special voluntary disclosure programme launched

The SVDP came into effect on October 1 2016. It provides an opportunity for individuals and companies to “come clean” on undisclosed foreign assets and structures. Failure to disclose within the window period would make taxpayers liable to penalties, explained Gouws.

“The moment it hits [tax authorities] will know about assets and foreign trusts,” she said. This will prove to be a benefit to generate future tax revenue. “If they know where the cow is then they can milk the cow,” she added.

The SVDP is a means to make the fiscus stronger as authorities will know where the money is sourced, she said.

The previous amnesty in 2003 generated collections between R3bn and R7bn, she said. It is yet to be seen how much this amnesty would yield.

Andrew Wellsted, head of tax at Norton Rose Fulbright said that the SVDP could raise funding, but could not say how much. “A lot of it is conjecture,” he said, a lot of it involves the legality of the offshore assets. Wellsted explained there are legal and illegal ways of taking assets offshore which would make it difficult to sort through.

Sharing Gouws’ views, Wellsted said that the disclosure would give tax authorities an ability to keep track of things.

In his experience as a tax practitioner, Wellsted said the uptake of the SVDP has been 50:50. There is still a lot of suspicion on the effectiveness of the programme. People view the SVDP to be expensive, further people do not think they will be targets as they consider themselves as “small fish”.

People are also reluctant to come forward as they might implicate others and corporates in their disclosures.

ALSO READ: How SARS will collect R28bn

The aim of the programme should not be to generate massive revenue, said Wellsted. “The aim should be to let people disclose asset or structures and get future growth in the tax net.”

Wellsted added that there had been a trend for more cooperation by tax authorities and governments globally. However recent developments show increasing nationalism in certain parts of the world, as was seen with election of US President Donald Trump and Brexit.

The international drive towards Base Erosion and Profit Sharing could hit a few “speed bumps”, said Wellsted.

PwC’s tax policy leader, Kyle Mandy said that BEPS would remain in focus in this year’s budget. Gordhan may make announcements on the continuation of reforms to address this. Illicit trade, whether cross border domestic evasion of taxes, remains a concern.

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