VOLUNTARY DISCLOSURE PROGRAMME
Non-disclosure to SARS may attract massive penalties!!
MORE INFORMATION
The avenue of VDP allows the regularisation of tax affairs without the payment of massive penalties, but this only remains available before SARS knocks on your door. Crucially, the VDP process remains the only way to avoid criminal prosecution for the non-disclosure of income or tax liability.
It is important to note that the VDP is applicable to all taxes administered by SARS, including income tax, employees’ tax (encompassing PAYE, SDL, UIF), VAT, but excluding Customs and Excise.
VOLUNTARY DISCLOSURE PROGRAMME
Non-disclosure to SARS may attract massive penalties!!
MORE INFORMATION
The avenue of VDP allows the regularisation of tax affairs without the payment of massive penalties, but this only remains available before SARS knocks on your door. Crucially, the VDP process remains the only way to avoid criminal prosecution for the non-disclosure of income or tax liability.
It is important to note that the VDP is applicable to all taxes administered by SARS, including income tax, employees’ tax (encompassing PAYE, SDL, UIF), VAT, but excluding Customs and Excise.
GENERAL INFORMATION RELATING TO VDP
VOLUNTARY DISCLOSURE RELIEF
SARS allows taxpayers to avoid criminal prosecution and regularise their tax affairs by making a disclosure under the VDP. A successful VDP application allows for an applicant to receive waiver of penalties and to settle outstanding tax liabilities with SARS.
The benefits of a successful VDP application:
• Regularise tax affairs;
• Remittance of 100% of understatement penalties;
• Remittance of 100% of administrative non-compliance penalties;
• Transfer foreign funds back to South Africa “clean”; and
• Amnesty from criminal prosecution.
COMMON REPORTING STANDARDS
South Africa is one of the signatories who implements the Common Reporting Standards (CRS), in terms of which tax and financial information is exchanged on a global level in order to minimize worldwide tax evasion. As of 1 September 2017, South Africa has commenced with the exchange of data with other signatories of the CRS to ensure transparency and more efficient tax administration.
Financial institutions will give personal account information to SARS on an annual basis which will expose any offshore transactions as well as offshore investment structures.
In that regard, our experience is that many taxpayers are at risk for failing to disclose the following:
• Rental income earned from lease of foreign property;
• Capital gains on disposal of property;
• Interest and dividends earned from foreign investment;
• Offshore trust distributions to South African beneficiaries; and
• Income for employment services performed abroad
REQUIREMENTS FOR A VDP
It is imperative that a VDP application complies with all the requirements stipulated in the Tax Administration Act.
The requirements for a valid VDP application are that the disclosure must:
• Be voluntary;
• Involve a default which has not previously been disclosed by the applicant or representative of the applicant;
• Be full and complete in all material aspects;
• Involve the potential imposition of an understatement penalty in respect of the default;
• Not result in a refund due by SARS; and
• Be made in the prescribed form and manner.
THE VDP PROCESS
GENERAL INFORMATION RELATING TO VDP
VOLUNTARY DISCLOSURE RELIEF
SARS allows taxpayers to avoid criminal prosecution and regularise their tax affairs by making a disclosure under the VDP. A successful VDP application allows for an applicant to receive waiver of penalties and to settle outstanding tax liabilities with SARS.
The benefits of a successful VDP application:
• Regularise tax affairs;
• Remittance of 100% of understatement penalties;
• Remittance of 100% of administrative non-compliance penalties;
• Transfer foreign funds back to South Africa “clean”; and
• Amnesty from criminal prosecution.
COMMON REPORTING STANDARDS
South Africa is one of the signatories who implements the Common Reporting Standards (CRS), in terms of which tax and financial information is exchanged on a global level in order to minimize worldwide tax evasion. As of 1 September 2017, South Africa has commenced with the exchange of data with other signatories of the CRS to ensure transparency and more efficient tax administration.
Financial institutions will give personal account information to SARS on an annual basis which will expose any offshore transactions as well as offshore investment structures.
In that regard, our experience is that many taxpayers are at risk for failing to disclose the following:
• Rental income earned from lease of foreign property;
• Capital gains on disposal of property;
• Interest and dividends earned from foreign investment;
• Offshore trust distributions to South African beneficiaries; and
• Income for employment services performed abroad
REQUIREMENTS FOR A VDP
It is imperative that a VDP application complies with all the requirements stipulated in the Tax Administration Act.
The requirements for a valid VDP application are that the disclosure must:
• Be voluntary;
• Involve a default which has not previously been disclosed by the applicant or representative of the applicant;
• Be full and complete in all material aspects;
• Involve the potential imposition of an understatement penalty in respect of the default;
• Not result in a refund due by SARS; and
• Be made in the prescribed form and manner.
THE VDP PROCESS
- Consultation
- Calculations and Risk Analysis
- Submission of Application to SARS VDP
- VDP Returns are Completed and Submitted to SARS
- Agreement Between SARS and Taxpayer to Wave Penalties
- Taxpayer Pays SARS Outstanding Tax Liability
- Taxpayers Affairs Regularised
SERVICE CATEGORIES
CATEGORY A INDIVIDUAL VDP APPLICATION
• I am an individual with tax returns up to date but need to declare either of the following:
– Interest generated from offshore bank accounts;
– Undeclared rental income; and/or
– Income for employment service performed locally/abroad.
• Full legal professional privilege applies.
CATEGORY B VDP APPLICATION FOR A CORPORATE/BUSINESS
• I represent a corporate with tax returns up to date that needs to declare either of the following:
– Employees Tax (i.e Understated/Undisclosed PAYE, SDL; UIF);
– VAT; and/or
– Undeclared / understated income.
• Full legal professional privilege applies.
CATEGORY C MORE COMPLEX, CONSULTATION WITH SPECIALIST ATTORNEY
• This is where your case is complicated, including legal interpretation, regulatory escalation and/or motivation as to whether you do indeed qualify for a VDP.
• Full legal professional privilege applies.
CATEGORY D I HAVE OUTSTANDING TAX RETURNS
• Historical non-compliance? Haven’t submitted returns? We can help you to become complaint, however, this is outside the sphere of the Voluntary Disclosure Programme.
• Our in-house tax returns team will help you become compliant.
IN THE NEWS
COMPANIES PLACED IN LIQUIDATION COURT LEAVES SARS WEAK, BUT RETRENCHED EMPLOYEES ARE THE REAL VICTIMS
The retrenchment numbers are unfortunate, but one would perhaps expect the numbers to be higher based on the known number of liquidations.