Exchange control – update regarding post SVDP regularisation

While the process to regularise one’s offshore assets from a tax and Excon perspective after 31 August 2017 remains the same as discussed in the Alert, the Finsurv SVDP Unit, which is considering Excon applications submitted in terms of the SVDP, released an updated guideline document on 13 November 2017, regarding regularisation from an Excon perspective. While the updated guideline document still states that applicants can submit applications to the Financial Surveillance of the South African Reserve Bank (FinSurv) directly or through an authorised dealer, it provides more detail regarding potential penalties. 

The updated guideline document states that as a general guideline, where voluntary disclosure is made by a contravening party and the person decides to repatriate the unauthorised assets, the minimum penalty (levy) is approximately 10% or more, but that a penalty of 20% or more could apply where the unauthorised foreign assets are retained abroad. It should be kept in mind that this is only a guideline and that FinSurv can in some cases still impose a penalty of 40%, where they deem this necessary. FinSurv retains this discretion in terms of Regulation 22 of the Exchange Control Regulations, 1961.

In light of the above, it would be worthwhile for applicants to consider repatriating at least a portion of their unauthorised foreign assets, in order to reduce the levy that will be payable.