Mahdi Meyer Steyn
A VDP (Voluntary Disclosure Programme) is a process by which SARS extends an opportunity to taxpayers to regularise their tax affairs by disclosing any defaults on their income taxes for prior periods of assessment. A successful applicant usually receives a waiver from penalties imposed, and must only settle the outstanding income tax liability and accrued interest on overdue payment.
VDP is not a new concept within the South African tax system. A VDP period was announced from November 2010 to October 2011 which attracted more than 18,000 applications, of which all penalties (except penalties relating to late submission or late payment) were waived. Criminal prosecution was also not pursued.
As part of the Tax Administration Act no. 28 of 2011, a permanent VDP system was established which covers all tax types, excluding customs and excise taxes. The system commenced in October 2012 and is still active. As per the prior VDP, the current system wishes to afford tax payers the opportunity to come forward with regards to any defaults on their taxes while also waiving any possible penalties (pending the severity of the transgression) as well as criminal prosecution. The outstanding tax liability and interest on late payment would still be levied.
All taxpayers (Natural Persons, Companies, Close Corporations, Trusts and Deceased estates) are eligible to submit a VDP application.
What is SVDP?
A Special Voluntary Disclosure Programme (SVDP) was announced by the Minister of Finance on 24 February 2016. This system wishes to regularise taxpayers in terms of income tax and Excon contraventions relating to foreign income received and foreign assets held.
SVDP is open for application from 01 October 2016 until 31 August 2017 and is only applicable to foreign income received and foreign assets held during the period 1 March 2010 – 28 February 2015. Income received and assets held before the window period can be regularised within the period mentioned 1 March 2010 – 28 February 2015.
As the SVDP operates in partnership between the Reserve Bank and SARS, no subsequent disclosures would need to be made to the Reserve Bank if the disclosure was made under SVDP to SARS. Regularisation outside the SVDP channel is still available.
The SVDP is only open for application by Individuals, Companies, Close Corporations and Deceased estates. Local and foreign trusts are excluded; however, settlors, donors and beneficiaries of offshore trusts can participate if they deem the trust’s offshore assets and income to be deemed to be held by them during the window period as mentioned.
What is required from me?
To start off, first obtain all relevant supporting documentation relating to the possible transgression(s). The best place to start, would be to acquire all the bank statements, bond account statements, investment account statements and tax certificates applicable to the periods under assessment. Remember that any documentation relating to the acquisition, existence and disposal of the assets or income sources would help in determining if regularisation is required as well as justifying applications made to SARS.
The next step would be to determine if sufficient disclosure was made to SARS regarding the income received. For foreign investments made, one would need to reflect if the proper authorisation was received from the Reserve bank to expatriate the funds. If you are satisfied that the adequate disclosure or the appropriate authorisation was granted, then no transgression took place.
If inadequate disclosure was made regarding income received, or unauthorised expatriations of funds took place, one would need to assess the regularisation route to follow.