All South African taxpayers will be audited sooner or later on their income tax affairs. Whilst many taxpayers have avoided this at present, the South African Revenue Service (SARS) has made obvious their current aim and focus to create a culture of tax compliance in South Africa and which will mean increased numbers of audits. This attitude is in line with the processes already followed in the United States, later in the United Kingdom and more recently in Australia.

South Africa has also recently committed to the international Common Reporting Standards, in terms of which governments around the world have committed to the exchange of financial information of its citizens in an effort to curtail worldwide tax evasion. From 1 September 2017, SARS will obtain information on taxpayer’s foreign bank accounts, properties and other assets and have previously not been disclosed by the taxpayer.

In recognising the importance of becoming tax compliant, taxpayers recently made use of the SARS Special Voluntary Disclosure Programme (SVDP) which gave them an opportunity to regularise their unauthorised foreign assets and income by voluntary disclosing this information. Individuals and companies were afforded the opportunity to apply during the window period from 1 October 2016 until 31 August 2017 and received amnesty for historical tax liability.

The SVDP deadline has since lapsed, however taxpayers who did not avail themselves of the SVDP and therefore remain in a position of non-compliance are not without options. The SARS Voluntary Disclosure Programme (VDP) is administered under the Tax Administration Act, 2011 and has been open to taxpayer since 1 October 2012. The VDP process remains open to taxpayers with undisclosed or understated tax liabilities and which will grant also amnesty to the taxpayer for understatement penalties, which SARS may levy up to a value of 200% of the liability.

Taxpayers who are therefore in a position of tax non-compliance, should investigate whether they qualify for the VDP process and consider whether now is perhaps the time to disclose their historical tax defaults. We facilitate this process and are well versed with the VDP provisions to advise taxpayers of a correct disclosure on a first-time base.

Contact us to obtain advice or assistance with your VDP submission.

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