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Disclosure of exchange control violations

02 Mar 2011

Jaco OdendaalIn addition to the Voluntary Disclosure Programme available to tax payers – the so-called Tax VDP – the Minister of Finance announced a voluntary disclosure programme for regularising the exchange control affairs of current and former South African residents.

As part of the Exchange Control Voluntary Disclosure Programme (Excon VDP), contraventions of the provisions of the foreign exchange control regulations can now be disclosed to the Financial Surveillance Department (FinSurv) of the South African Reserve Bank. In cases where a full disclosure has been made and administrative relief granted by FinSurv, no further action will be taken against such persons.

Applicants will be granted relief in terms of the VDP if they meet the following requirements:

  • applicants must have contravened the regulations prior to 28 February 2010;
  • applicants must have made a full disclosure in each case;
  • applicants must have submitted application forms in the prescribed format;
  • applications must contain full details including a description, the location and market value of the relevant assets and proof of valuation.

Applicants who are granted relief in respect of unauthorised foreign assets and/or structures may have to pay a levy on the market value thereof. This levy will be calculated at a rate of 10% of the market value of the unauthorised foreign asset on condition that it is paid from foreign funds. Where no foreign funds are available, the rate will increase to 12%.

Should South African residents who have contravened the regulations choose not to use the Excon VDP, FinSurv may apply various sanctions, including the attachment of assets, blocking of funds, charging interest and/or criminal prosecution.

South African residents who have contravened the regulations should therefore seriously consider disclosing such contraventions to FinSurv before 31 October 2011.

For more information contact Jaco Odendaal at Exceed Tax & Management Services on tel. 021 882 8140 or e-mail jaco@exceed.co.za.

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