The South African Revenue Authority (SARS) has provided under the Tax Administration Act No. 28 of 2011 that the Voluntary Disclosure Programme (VDP) is permanently available to a qualified person, company or trust who wishes to voluntarily disclose and manage its tax affairs. This is consistent with SARS`s policy objective of providing clarity and certainty and making it easy and transparent for taxpayers and contractors to meet their obligations. A: An agreement is reached between SARS and the applicant that reflects the outcome of the application process. We recognize the role of taxation in nation-building and therefore view the tax system as a nation-owned asset. In our work, we are guided by the SARS Code of Conduct and values principles of accountability, fairness, honesty, integrity, respect, transparency and trust. SARS promotes compliance with tax and customs laws to ensure that everyone pays their fair share. We do so in a manner that does not unduly impede trade, economic growth and development by imposing an excessive and unfair administrative burden on taxpayers, traders and businesses, and to ensure compliance in the most efficient and cost-effective manner possible. Taxpayers who suffer SARS-related tax losses and wish to be exempt from penalties and avoid potential criminal prosecution may voluntarily disclose their outstanding tax issues. Tax losses range from pending returns, the submission of incorrect or incomplete information, or failure to provide SARS with the requested information for each type of tax administered by SARS, with the exception of duties and taxes levied under the Customs and Excise Act No. 91 of 1964.
It is important to note that the benefits of a VDP are only available to taxpayers after a successful VDP agreement with SARS has been concluded, which can occur several months after the VDP application is submitted. The successful conclusion of a VDP agreement protects taxpayers from criminal prosecution as well as most penalties (including euphemism penalties). The WTP regime is therefore extremely advantageous for taxpayers, who would otherwise have been subject to heavy penalties. The draft guidelines state that a VDP request made by a taxpayer after the taxpayer becomes aware of a possible default after SARS requested an inspection or review related to the delay will not be considered “voluntary”. Without the inspection or verification related to the defect, the taxpayer would not have requested the VDP. This argument was confirmed in Purveyors, where it was found that the taxpayer had not self-reported, in part because his VDP application was motivated by compliance actions taken by SARS, which was aware of the breach. In paragraph 20 of the judgment, Mathopo J. states: “The purpose of the application is to ensure that misguided taxpayers who do not comply with the rules must, of their own volition and without being asked, remedy their shortcomings by informing them of SARS”. A: The VDP is intended to encourage taxpayers to volunteer to settle their SARS tax affairs and avoid the imposition of understatement and other administrative penalties. Successful VDP applications will result in an agreement that includes, but is not limited to: SARS wants to encourage all taxpayers who may be late in their tax affairs to contact SARS through the voluntary disclosure program.
By volunteering, these taxpayers receive the help and advice of SARS to expedite the resolution of their claims. If SARS detects violations through its own investigative procedures, it will not take advantage of this opportunity for non-compliant taxpayers, but will act within the law to address non-compliance. A: An incomplete VDP application will be rejected by the VDP entity without further notice to the applicant. The SVDP can be claimed from October 1, 2016 to August 31, 2017 and applies only to foreign income and assets held during the period from March 1, 2010 to February 28, 2015. Income and assets received before the window period may be adjusted in the specified period from 1 March 2010 to 28 February 2015. • I am a natural person with up-to-date tax returns, but I must provide one of the following: – interest on offshore bank accounts; – undeclared rental income; and/or – income for investment at home and abroad. • Professional secrecy applies. It goes without saying that if SARS is aware of a taxpayer`s default, the taxpayer would not “disclose” SARS if it were to notify SARS of the default. As Reed v Minister of Finance and Others [2017] ZAGPPHC 987 states: “When someone knows something, it is difficult to see how another person, without forcing language to the point of incomprehensibility, can `disclose` what is known in the first person.” VDP is not a new concept in the South African tax system. From November 2010 to October 2011, a VDP period was announced, during which over 18,000 applications were submitted, of which all penalties (except penalties related to late submission or late payment) were waived. No criminal proceedings have been initiated either.
• I represent a company with up-to-date tax returns, which must provide one of the following: – Employee tax (i.e. underestimation/non-disclosure PAYE, SDL; UIF); –VAT; and/or – Undeclared/too low income. • Professional secrecy applies. The draft Guide endorses the dictionary definition of “voluntary” as “voluntarily performed, done or given voluntarily without coercion or payment”. A: No. The VDP valuation implements the VDP agreement and typically includes the additional taxable income reported and, depending on the date the delay occurred, interest and penalties for default. The reductions are regrettable, but one would expect the numbers to be higher due to the known number of liquidations. There are signs that even more difficult times lie ahead, which could explain the lower numbers. A lesser-known reason for the lower reported figures is that some payments to employees by liquidators are not subject to SARS tax guidelines, so no withholding tax or PAYE deductions are made. As a result, these employees are not reported to SARS, which means that SARS is also unable to report these numbers. A: No. Interest and penalties are part of the VDP Agreement and the VDP Valuation, both of which are final and binding.
It is mandatory that a VDP application meet all the requirements of the Tax Administration Act. Disclaimer: We will do our best to assist you in applying to the South African Revenue Authority (“SARS”). Our service includes, but is not limited to, the collection of all information and preparation as required, but the request for additional information and verification remains at SARS`s discretion. All information you provide will be believed to be true and accurate and Creative CFO will not be responsible for any omission or misrepresentation by you or any delay in the SARS processing time. South Africa is one of the signatories to the implementation of the Common Reporting Standards (CRS), which allow tax and financial information to be shared globally to minimise global tax evasion. Since 1. In September 2017, South Africa began exchanging data with other CRS signatories to ensure transparency and more efficient tax administration. Any person or business that wishes to voluntarily disclose its tax affairs to SARS may apply, provided they are eligible.
For an application to be valid, the following requirements must be met: SARS allows taxpayers to escape prosecution and manage their tax affairs through the disclosure of the VDP. An accepted VDP application allows an applicant to obtain penalty relief and settle outstanding SARS tax debts. After submitting a VDP application, the VDP unit first verifies that the applicant meets the relevant requirements before a VDP agreement can be signed. The requirements contained in Article 227 of the TAA are that disclosure: Under Law No 28 of 2011 on Tax Administration, a permanent POS system has been established covering all types of taxes, with the exception of customs duties and excise duties. The system was launched in October 2012 and is still active. According to the previous VDP, the current system aims to give taxpayers the opportunity to express their views on possible tax deficits, while waiving possible sanctions (up to the seriousness of the offence) and criminal prosecution. Unpaid tax debt and default interest would continue to be charged. A: Yes. For an application to be valid, the following conditions must be met: The question arises as to what is meant by `audit`, since this term is not defined in the TAA. The VDP route allows for regulation of tax matters without paying massive penalties, but that only remains available before SARS knocks on your door. Basically, the VDP procedure remains the only way to avoid criminal prosecution for non-disclosure of income or taxes payable.
Potential applicants can apply for a VDP through SARS e-filing. A: This indicates that the taxpayer or representative is not listed for the tax type on the electronic return and that the tax type is not linked to the profiles. Since the SVDP works in partnership between the Reserve Bank and SARS, no further disclosure would be required to be made to the Reserve Bank if the disclosure were made to SARS under the SVDP. Regularization outside the SVDP channel is always possible.
