Exchange control circular issued in respect of special voluntary disclosure programme

The SVDP will run for a period of six months from 1 October 2016 to 31 March 2017 (SVDP Period). The SVDP will afford South African residents (individuals, sole proprietorships, partnerships, deceased estates, insolvent estates, South African trusts, close corporations and companies) and former residents the opportunity to disclose their foreign assets held in contravention of the Exchange Control Regulations, 1961 (Regulations) so as to regularise their affairs from an exchange control perspective.

According to the Circular, applications for exchange control relief under the SVDP must be made pursuant to the provisions of Regulation 24. Applications and the relevant supporting documents must be submitted electronically to the SVDP unit via the South African Revenue Service’s (SARS) eFiling system, alternatively at any SARS branch. The Circular states that separate electronic application forms for the tax and exchange control relief have been created. The SVDP unit will be jointly operated by FinSurv and SARS.

The Circular has warned that any party involved in a matter currently under investigation by FinSurv may not apply for exchange control relief under the SVDP. Further, no applications for exchange control relief under the SVDP may be made prior to the official commencement date of the SVDP, namely 1 October 2016.

Applications may be made in a personal or representative capacity, however, any application made in a representative capacity will require proof of authority. The relevant proof must be submitted with the SVDP application.

According to the Circular, FinSurv may grant relief to a South African resident in terms of Regulation 24, provided that:

• the unauthorised foreign assets for which the relief is sought were held on or before 29 February 2016;
• applications are made within the SVDP Period;
• the declaration made by the applicant is voluntary;
• the applicant makes full disclosure of all unauthorised foreign assets and stipulates the source of these assets and includes details of the manner in which the assets were transferred and retained abroad;
• the applicant furnishes all documentation and information as stipulated in the SVDP application form, including:
• the market value of the unauthorised foreign asset as at 29 February 2016 in the foreign currency of the country in which such asset is situated;
• a description of the identifying characteristics and location of the unauthorised foreign asset;
• a valuation certificate by a valuator of the country where the unauthorised foreign asset is located, or a valuation by a sphere of government in the country where such asset is located, or an original or certified statement of account indicating the balance or market value, or any other form of proof of the value of that asset as the Treasury may on good cause shown allow to be submitted; and
• a sworn affidavit or solemn declaration of the contravention; and
• the applicant furnishes any additional information relating to the unauthorised foreign assets as may be required in terms of the SVDP.

Applicants will be liable to pay a levy based on the market value of the unauthorised foreign assets as at 29 February 2016. The following conditions will apply to the levy:

• a levy of 5% will be payable on the value of the unauthorised foreign assets or the sale proceeds thereof if such assets are repatriated to South Africa. The levy must be paid from foreign-sourced funds;
• a levy of 10% will be payable on the value of the unauthorised foreign assets if such assets are retained abroad. The levy must be paid from foreign-sourced funds;
• a levy of 12% will be payable on the value of the unauthorised foreign assets in circumstances where the 10% levy is not paid from foreign-sourced funds;
• applicants may not deduct any exchange control allowance or any remaining portion thereof from the leviable amount;
• the levy may not be reduced by any fees or commissions;
• the levy must be paid within three months from the date of receipt of notification from FinSurv;
• where the 5% or 10% levy is payable, the levy must be repatriated to South Africa to an account held at a local authorised dealer (such as a commercial bank) and must be converted in South Africa at the ruling spot exchange rate; and
• the Rand proceeds of the foreign currency introduced by means of the 5% or 10% levy or the Rand value of the 12% levy must be paid by the authorised dealer into an account held at the Corporation for Public Deposits (CPD) established in terms of s2 of the Corporation for Public Deposits Act, No 46 of 1984.

In instances where the unauthorised foreign assets are denominated in multiple foreign currencies, applicants will be permitted to convert those foreign currency amounts to United States Dollar (USD) for purposes of the levy and by using the rate of exchange as at 29 February 2016. The conversion rate of major foreign currencies to USD as at 29 February 2016 will be published on the SARB website.

According to the Circular, confirmation of administrative relief will only be furnished once the applicable levy has been paid to the CPD and, where applicable, conditions imposed by the SARB have been met.

Applicants aggrieved by FinSurv’s decision to refuse an application or to declare void any applications previously approved may lodge a written objection with the Head of FinSurv and must deliver a notice of this objection within 30 days from the date of delivery of the FinSurv notice refusing administrative relief, or withdrawing or declaring void the previous relief granted.