Taxand South Africa explains the voluntary disclosure of undeclared foreign assets in offshore trusts.
In the context of trusts situated in foreign participating jurisdictions, the Common Reporting Standards (CRS) require the trustees to identify the settlor, beneficiaries and other natural persons exercising ultimate effective control (including through a chain of ownership) and report the necessary financial information in respect of those persons to the relevant foreign revenue authority. In the event that the said persons are identified as residents of South Africa, the reported information will, in turn, be automatically exchanged with the South African Revenue Service (SARS).
The South African authorities have, with regard to the imminent reporting under CRS and the investigations surrounding the Panama Papers, provided an opportunity for non-compliant South African residents to regularise their tax and/or exchange control affairs in respect of offshore assets under the Special Voluntary Disclosure Programme (SVDP), which commenced on the 1 October 2016 and will close on 30 June 2017. The tax relief under the permanent Voluntary Disclosure Programme in terms of the Tax Administration Act No. 28 of 2011 (permanent VDP) also remains available. It has, however, been questioned whether any alternatives to voluntary disclosure are available for South African residents with undeclared foreign assets in offshore trusts.
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It is advisable for South African residents with undeclared assets in offshore trusts to have regard to the fact that the relief under the tax and exchange control SVDP will not be available in respect of offshore assets that have been disclosed to SARS under an international exchange of information procedure, such as CRS.
