SARS Amnesty Sees Requests Totalling R3bn In First Two Days

by Robert Lee, Tax-News.com, London

07 March 2003

An amnesty on the repatriation of illegal offshore investments is expected to see billions of Rand flowing back into South Africa in the wake of Trevor Manuel's budget announcement last week.

According to press reports emanating from Johannesburg, within two days of the announcement, enquiries concerning R3 billion had already been submitted to South African Revenue Service (SARS) commissioner Pravin Gordhan by various tax consultants. It is thought that this could be just the tip of the iceberg, and some have estimated money parked illegally in offshore accounts at anything up to R90 billion. "There is a lot of money out there" confirmed Gordhan to the parliamentary finance committee yesterday.

Under the amnesty, those making a full disclosure of any offshore assets and liabilities that breached previous rules on foreign exchange controls and income tax regulations prior to 28th February last year will be exempted from criminal or civil sanctions.

This is one of the central planks of Trevor Manual's policy to clean up the tax system. According to a report in Business Day, Gordhan recently reiterated the authorities lenient stance on offenders, saying "from the SAR's side, there is definitely no intention of being recriminatory, but we would like to know how these thing happened." As Business Day put it, the move was designed to create a new "culture of compliance", and was not intended to be a "witch hunt".

However, Rhodes University Professor Matthew Lester doubted the success of the scheme, citing many people's fear of prosecution. "South Africans are terrified of bringing their money back, tripping up the SARS computer and being prosecuted" he said. Gordhan countered this saying that "the success of the amnesty is going to depend on us being able to convince the public that there is not going to be recriminations".

The government stands to take a 5% cut of all money coming in under the amnesty scheme. This will help to fund Manual's expansionary budget which included tax cuts for business and wage earners, as well as massive infrastructure investments in education, public health, law and order and black empowerment schemes.

Recommended