Following the UBS debacle, the IRS in the US has offered an amnesty for taxpayers who make full disclosure before 23 September 2009.

Although the amnesty or voluntary disclosure program, as it is generally known, is aimed at taxpayers who have been using offshore accounts and structures to evade US tax, the ambit is far wider and it covers the non-disclosure of non-US income and foreign accounts in general.

Even if disclosure is made under the program, significant penalties apply in most cases. What makes the deal tough for South Africans who have acquired US tax status is that the penalties often apply to their South African (and other non-US) bank accounts, even though the funds in question were typically earned before they acquired US status. The penalty is generally 20% of the amount in the account if the account is not disclosed to the IRS. This is in addition to tax and penalties if there are taxes owing.

Similarly, US citizens (expats) living in South Africa who have not disclosed their South African bank accounts to the IRS are subject to penalties under the program. The IRS has warned that the consequences will be significantly worse for taxpayers who do not come forward.

Seems like the war against terrorism has been extended to the war against expats!

Yours truly,
Stiaan Klue
Chief Executive

Paragraph 12(5) of the Eighth Schedule to the Income Tax Act 58 of 1962, as amended, was introduced to deal specifically with the scenario where a debt owed by a debtor to a creditor is reduced or discharged by the creditor for no consideration, or for one which is less than the amount by which the face value of the debt is reduced or discharged.

The Minister of Finance tabled the final draft Taxation Laws Amendment Bills, 2009 in Parliament on 1 September 2009.

South Africa has, somewhat belatedly, realized that if it wants to escape from its historical reliance on mining and agriculture, it must join the developed world in becoming a knowledge-based economy. This will save local industries from having to pay royalties to foreign entities for the right to use the latter’s know-how.

In tandem with the spate of tax prosecutions following the UBS case, the IRS has offered an amnesty for taxpayers who make full disclosure before September 23.

In Goldblatt and Others v Liebenberg and Another (to be reported in the South African Tax Cases Reports Vol 71 Part 6) the Western Cape High Court had to consider whether the balance of a judgment debt had been discharged by the applicants, not by payment direct to the first respondent, but through the payment of various sums to third parties, including SARS, which the applicants contended were monies owed to such third parties by the first respondent.

The Second National Tax Conference were held on 8 and 9 September 2009 at Indaba Hotel, Fourways. Papers were delivered by local and international tax experts, including Professors Duncan Bentley (Curtain University, Australia) and Chris Evans (Australian School of Taxation, UNSW).

The deadline for submission of manual returns is 18 September 2009.

SARS issued a newsletter to tax practitioners on 11 September 2009, notifying tax practitioners VAT who do not meet certain requirements of the VAT Act will have their registrations cancelled or suspended.

In July/August this year SARS published a draft document on proposed PAYE amendments for 2010, inviting employers and practitioners to comment on the proposals. SARS also engaged with large employers and payroll organisations before releasing the final PAYE 2010 Specification document on 1 September.

Minister Pravin Gordhan announced the change in the official interest rate for the purposes of paragraph (a) of the definition of "Official rate of interest" in paragraph 1 of the Seventh Schedule to the Income Tax Act, 1962 as 8% in the Government Gazette of 31 August 2009 (GG No 32546). The change is effective 1 September 2009.

SARS released the updated guide on 4 September 2009.

This is the fifth such agreement that Gibraltar has entered into.

On 7 September 2009, the OECD released the 2009 edition of its Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.

In a statement following their 5 September meeting in London, the G20 Finance Ministers and Central Bank Governors reaffirmed their commitment to strengthen the financial system, but stated that more needs to be done to maintain momentum, make the system more resilient and ensure a level playing field, including tackling non-cooperative jurisdictions (NCJs).

On 9 September 2009, the OECD released for public comment a proposed revision of Chapters I-III of the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.

The High Level VAT Conference was held in Lucerne on 9-10 September 2009, bringing together senior tax policy officials from 25 OECD countries, the European Commission and 5 non-member economies.

Aruba and the Netherlands Antilles have signed bilateral agreements with seven Nordic economies - Denmark, the Faroe Islands, Finland, Greenland, Iceland, Norway and Sweden - on exchange of information for tax purposes.