Voluntary Disclosure Programme Amnesty
Voluntary disclosure is one of the most significant developments in tax law in South Africa for some time. Established by statute, the Voluntary Disclosure Programme (VDP) is an independently operating unit of SARS. Its mandate is to generate additional tax revenue for the South African government through reaching agreements on unpaid taxes (including on foreign-held capital) with individual South African residents.
The VDP assists people who may have underpaid their tax liabilities through under-declaration or non-declaration of their assets in regularising their position with SARS. Discretion and confidentiality are watchwords of the VDP.
The purpose of the VDP is to enhance voluntary compliance in the interest of good management of the tax systems and the best use of SARS’s resources. The VDP encourages taxpayers to come forward on a voluntary basis to regularise their tax affairs with SARS and avoid the imposition of understatement penalties and administrative penalties of up to 200%. Co-operation with the VDP also grants individual taxpayers immunity from criminal prosecution.
Initially a one-year trial known as VDP 1, this scheme became a permanent feature of the South African tax landscape from 2012 following the signing into law of the Tax Administration Act of 2011. VDP is today regarded as one of the most successful units of SARS, having recovered well over R8 billion in unpaid taxes to date.
On 24 February 2016, the Minister of Finance in his Budget Speech announced the introduction of a Special Voluntary Disclosure Programme to give a further opportunity for non-compliant taxpayers who still have undisclosed assets abroad to voluntarily disclose their offshore assets and income. Applications for the proposed relief may be made in a limited period of six months commencing on 1 October 2016 and closing on 31 August 2017.
This amounts to a VDP amnesty and is a unique opportunity for South African residents with undeclared overseas assets and investments to regularise their tax affairs with SARS and avoid possible prosecution and punitive fees and penalties.
IWP and the VDP
As a leading overseas financial services advisor, IWP is ideally placed to assist and represent you through the VDP process. We can help you find the most tax-efficient way to ensure your compliance, at the same time as designing investment portfolios which will help enhance the effectiveness of your tax strategy.
We will help you ensure complete compliance and reduceany penalties, in the most cost-effective manner possible. We are experienced in helping clients reach final agreements with the VDP and keeping their money clean and fully disclosed.