Voluntary Disclosure To Improve Tax Collections

Pravin Gordhan, the Minister of Finance, in the Budget Speech delivered during February 2010 announced the Voluntary Disclosure Programme (VDP) aimed at allowing the South African Revenue Service to improve tax collections. The object of the VDP is to allow taxpayers an opportunity, up to 31 October 2011, to disclose any prior tax defaults and receive relief from interest, penalties and prosecution. The VDP is aimed at those who have defaulted in the payment of their taxes or who have funds abroad illegally who now have an opportunity to rectify the situation.

Any taxpayer, who is aware of a current or pending audit or investigation into his/her tax affairs may apply for VDP only if granted permission to do so by the Commissioner of SARS. Successful applicants will be liable to settle the initial tax liability but will be granted the following relief:

1. SARS will not initiate any criminal prosecution for any statutory offence under a tax act or a related common law offence.
2. 100% relief in respect of any penalty and additional tax, except administrative penalties for the non-submission of an income tax return and the late payment of tax.
3. 100 % relief in respect of interest payable. Applicants who required permission of the Commissioner of SARS to apply will be granted 50% relief in respect of interest payable if successful.

 The requirements for valid VDP are that disclosure must:

• Be voluntary
• Involve a default which occurred prior to 17 February 2010
• Be full and complete in all respects
• Involve a penalty or additional tax in respect of the default
• Not result in a refund
• Be made on the prescribed form before 31 October 2011

 
An electronic application form is available on www.sarsefiling.co.za for registered eFilers. Taxpayers can also visit any SARS office where they will be assisted to complete an electronic application on the SARS system. Forms are also available from the SARS Contact Centre (0800 00 7277)

Applicants, who wish to first obtain an indication of the possible relief they may qualify for, may submit an anonymous application not revealing their identity. SARS may then issue a non-binding opinion indicating whether or not the applicant would qualify for relief and the extent thereof. If the applicant then proceeds, a complete application will have to be made and the identity of the applicant will have to be declared. An anonymous applicant who does not proceed with a formal application after receiving the non-binding SARS opinion will remain at risk if any defaults are identified.

Contraventions in terms of the Exchange Control Regulations also qualify for relief under the VDP. Application for this must be made to the South African Reserve Bank`s (SARB) Financial Surveillance Department (Finserve) VDP Division. In this regard enquiries may directed by sending an e mail to:SARB-VDPFNS2rebank.co.za or visit the SARB website at www,reservebank .co.za or call 012 313 3169.

Pieter Rautenbach