All individuals and businesses that earn taxable income should pay tax to the South African Revenue Service (SARS). However, some taxpayers neglect their tax obligations thereby jeopardizing the government’s revenue collection efforts. The good news is that SARS, according to the Tax Administration Act No. 28 of 2011 has promulgated the Voluntary Disclosure Program (VDP) to help qualifying individuals and businesses regularise and settle their tax affairs. This provision makes it easy for willing taxpayers who may be in default on tax matters to rectify everything via VDP without penalties. This guide explains everything you want to know about voluntary disclosure applications.
What Is a VDP Application With SARS?
Any individual or business intending to voluntarily disclose their non-compliance tax affairs can approach SARS if they meet the VDP application requirements. SARS is committed to encouraging taxpayers to understand that they can regularise their tax affairs without consequences like criminal prosecution or penalties.
If your VDP application is successful, SARS will provide a waiver of penalties, and you will be allowed to settle your tax liabilities. The main benefits of a favorable VDP include the following:
- The taxpayer is allowed to regularise their tax affairs
- The taxpayer will get amnesty from penalties or criminal prosecution
- Remittance of non-compliance penalties
- Remittance of understatement penalties
- Transfer of funds held in foreign accounts to South Africa
If you have defaulted in your tax affairs, you can consider a VDP to correct the situation.
How Long Does the VDP Application Take?
The VDP application is done by completing the VDP01 form accessible via the SARS eFiling system. The process of completing the VDP application is simple as long as you are registered on the eFiling system. All you need is an eFiling account, an appropriate device, and access to a reliable internet connection.
However, the main challenge is that SARS is usually overwhelmed by VDP applications, which impacts the processing time. As a result, a VDP application has a turnaround time of around 201 working days, which is more than six months.
When your VDP application is successful, you will enter into an agreement with SARS that covers the following things:
- All the facts about the defaults will be disclosed by the taxpayer.
- The taxpayer gets relief from SARS.
- The amount payable and understatement penalty are shown separately.
- The taxpayer and SARS agree on payment terms and dates.
- If SARS later determines that the disclosure was not complete under tax VDP, the relief may be withdrawn.
When your VDP application is approved, you should know that it is a privilege meant to give you a chance to correct your wrongs. SARS has the discretion to revoke the relief.
What Are the Requirements for Voluntary VAT Registration in South Africa?
If you have tax defaults and want to seek relief from possible criminal prosecution and penalties, you can consider the option of voluntarily disclosing your outstanding taxes. If you operate a business, you can also consider voluntary VAT registration to ensure compliance with SARS. VDP provides a perfect opportunity for defaulting taxpayers to correct their tax affairs without any retribution.
However, not every individual or business qualifies for VAT registration. VDP applicants must meet the following requirements.
- A VDP application must meet all the requirements outlined in the Tax Administration Act.
- The disclosure must be voluntary.
- The tax default is new and it has not been disclosed by the applicant or their representative.
- The disclosure shall not lead to a refund due by SARS.
- The disclosure might lead to an understatement penalty regarding the default.
- The disclosure has all the material aspects.
- The disclosure is conducted in a prescribed manner.
If the VDP application does not meet some of these requirements, it might be rejected.
How Do I Make a Voluntary VAT Disclosure?
If you have tax defaults with SARS and seeking relief from penalties and criminal prosecution, it is a good idea to voluntarily disclose your outstanding taxes. This program allows you to regularise your tax affairs so that your business will be compliant. You can approach SARS if you default on your tax obligations.
The Voluntary Disclosure Program is designed to protect the interests of people like you who want to correct their tax affairs. You can contact SARS via the eFiling platform choose another appropriate channel like email, or visit your nearest SARS branch. When you go forward with your case voluntarily to SARS, the officials will give you help and advice on how to resolve your request.
SARS is committed to promoting voluntary compliance among defaulting taxpayers, so you should not hesitate to approach them for help. Remember, if SARS discovers through its investigations that you have been non-compliant in your tax affairs, you will not get the opportunity to regularise your tax obligations. Instead, SARS will apply the relevant law to address the issue of noncompliance. With VDP, you can make your life easier because you will get relief once your application has been approved.
If you have outstanding taxes caused by neglect of your tax obligations, you can correct the issue by considering a voluntary disclosure application. This program is designed to help defaulting taxpayers regularise their tax affairs. Once your VDP is approved, you will get relief and be spared from penalties and criminal persecution. However, this can only be possible if you meet the requirements for voluntary VAT registration. Make sure you provide the correct details to get approval. This option can give you peace of mind because penalties will be waived.
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