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South Africa: SARS put measures in place to help taxpayers

The South African Revenue Service (SARS) has announced that it is making its Voluntary Disclosure Programme (VDP) permanently available.

The VDP is a type of ‘open door’ policy the revenue service has in place that allows taxpayers to regularise their tax affairs by coming clean on defaults in their tax payments or any other tax non-compliance that may lead to penalties or action if discovered by SARS itself.

Prior to this move, the programme was only available during specific windows during certain tax seasons. VDPs have been part of South Africa’s tax regime since 2011, while a Special VDP was announced in the 2016/17 tax season.

According to SARS, the step to make the programme permanently available is in line with the revenue service’s strategic objective to provide clarity and certainty as well as make it easy and seamless for taxpayers and traders to comply with their obligations.

“SARS would like to encourage all taxpayers who may be in default on their tax affairs to approach SARS via the Voluntary Disclosure Programme. By coming forward willingly, such taxpayers will receive help and advice from SARS to expedite the resolution of their request,” it said.This includes relief from penalties and legal action.

SARS said that if non-compliance is discovered through its own investigative processes, the assistance offered through the VDP will not be available, and the taxman will take the necessary action within the remit of the law to deal with non-compliance.

“We want all taxpayers to understand that they always have an opportunity to regularise their tax affairs,” it said.

While voluntary compliance is SARS’ preference, the group warned that it is refining its capability to detect non-compliance and will make it hard and costly for taxpayers who are not keeping up with their tax affairs.

Using the VDP

Taxpayers who have tax defaults with SARS and would like to be granted relief from penalties and avoid possible criminal prosecution can voluntarily disclose their outstanding tax affairs.

Tax defaults range from outstanding returns, submitting inaccurate or incomplete information or the failure to submit information to SARS requested in relation to any tax type that SARS administers, excluding duties and levies charged in terms of the Customs and Excise Act, 91 of 1964.

A defaulting taxpayer will be granted relief under the Voluntary Disclosure Programme if the application meets the following requirements:

  • The disclosure must be voluntary;
  • The disclosure is full and complete in all material respects;
  • The disclosure involves a default which has not occurred within five years of the disclosure of a similar default;
  • The disclosure involves a behaviour referred to in the understatement penalty table in Section 223 of the Tax Administration Act;
  • The disclosure would not result in a refund due by SARS; and
  • The disclosure is made in the prescribed form and manner.
  • Prospective applicants can apply for VDP via SARS eFiling.

Successful VDP applications will culminate into an agreement that will cover, amongst others:

  • The material facts of the defaults disclosed;
  • The amount payable by the taxpayer including the understatement penalty separately reflected;
  • The relief granted by SARS under the Tax VDP;
  • Payment arrangements and dates in respect of tax payable; and
  • The fact that the relief may be withdrawn if SARS subsequently determines that the disclosure did not constitute a valid and complete disclosure under the Tax VDP.

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