SARS has made a significant change to assist taxpayers – here's what you need to know

The South African Revenue Service (SARS) has announced the permanent availability of its Voluntary Disclosure Programme (VDP).

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

Previously, the programme was only available during specific windows during specific tax seasons. VDPs have been part of the South African tax system since 2011, and a Special VDP was announced for the 2016/17 tax season.

According to SARS, the decision to make the programme permanent is consistent with the revenue service’s strategic goal of providing clarity and certainty while also making 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 immunity from fines and legal action.

SARS stated that if non-compliance is discovered through its own investigative processes, the VDP assistance will be unavailable, and the taxman will take the necessary action to deal with non-compliance within the scope of the law.

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

While SARS prefers voluntary compliance, the organisation has warned that it is improving its ability to detect noncompliance and will make it difficult and costly for taxpayers who do not keep up with their tax affairs.

Using the VDP

Taxpayers who have outstanding tax affairs with SARS and want to avoid penalties and criminal prosecution can voluntarily disclose their outstanding tax affairs.

Outstanding returns, submitting inaccurate or incomplete information, or failing 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, are examples of tax defaults.

The Voluntary Disclosure Programme will grant relief to a defaulting taxpayer if the application meets the following criteria:

• 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 result in an agreement that includes, among other things:

• 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.

To use the VDP, taxpayers should contact the revenue service via the following channels:

Email: vdp@sars.gov.za

Telephone: 0800 864 613