Sars Tax

The SARS Voluntary Disclosure Programme (VDP)


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 SARS Voluntary Disclosure Programme (VDP) is administered under the Tax Administration Act, 2011 since 1 October 2012.

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.

Since South Africa introduced the principle of worldwide taxation in 2001, a number of tax amnesty programmes have arisen. A number of these amnesty programmes were focused on encouraging South Africans to declare and regularise their offshore income and assets, including the 2003 tax amnesty and the special voluntary disclosure programme (SVDP), which was in place between 1 October 2016 and 31 October 2017. A more permanent fixture in this regard has been the voluntary disclosure programme (VDP), which came into effect on 1 October 2012 and is contained in Chapter 16, Part B of the Tax Administration Act 28 of 2011 (TAA).

Under the VDP, any default committed in respect of any tax, except customs and excise taxes, can be declared, with a successful VDP application resulting in the following tax relief being granted to the applicant:

  1. An agreement by SARS not to pursue criminal prosecution for tax offence arising from the default declared in the VDP application;
  2. Relief from understatement penalties that would have arisen from the default; and
  3. 100% relief in respect of an administrative non-compliance penalty that was or may be imposed under Chapter 15 of the TAA or a penalty imposed under a tax Act, except a penalty imposed for the late submission of a return.


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 commenced with the exchange of data with other signatories of the CRS to ensure transparency and more efficient tax administration.

Financial institutions must give personal account information to SARS on an annual basis which will expose any offshore transactions as well as offshore investment structures.

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


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 application form is called the Voluntary Disclosure Application Form (VDP01) and can only be accessed via the SARS eFiling system.

The following items are important to note:

  1. It is not necessary to request re-confirmation of VDP applications. If the eFiling system recognised the application, then the application is on the VDP register and will be processed;
  2. The applicant will be contacted when the application is allocated to a VDP evaluator for processing. Additional or outstanding supporting documentation can then be submitted;
  3. A VDP application can at any time be cancelled by sending an email to;
  4. Outstanding tax returns that relate to a VDP application can be submitted to SARS through normal channels at any time before the VDP application is processed. If the return is assessed by SARS before the VDP application is processed, interest and penalties that are eligible for VDP relief will be waived when the VDP application is processed and a VDP agreement concluded.
  5. The SARS debt collection division is aware of this and will refrain from instituting collection steps on eligible interest and penalties until the VDP application is finalised.

An incomplete VDP application is discarded by the VDP unit without further notice to the applicant.

Examples of these are:

  1. Where the applicant does not reflect a description of the default if the source code is absent.
  2. If the application relates to outstanding tax returns of which SARS is already aware.

Examples of non-administrative compliance penalties are penalties relating to the underpayment of employees tax or provisional tax. The successful VDP applicant will only need to pay the tax that becomes payable pursuant to the declaration of the default and any interest imposed in respect of such tax.

In the 2021 Budget, it was announced that the VDP provisions would be reviewed in 2021 to ensure that they align with SARS strategic objectives and the policy objectives of the VDP.

The 2021 Budget did not indicate what the review would entail.

On 25 August 2020, the Gauteng Division of the High Court, handed down judgement in the matter of Purveyors South Africa Mine Services (Pty) Ltd v CSARS [2020] ZAGPPHC (25 August 2020). In this matter, the court was called on to interpret the voluntary requirement in section 225 of the TAA and held that in the circumstances of that case, the voluntary requirement had not been met by the taxpayer;

In Medtronic International Trading SARL v CSARS (33400/2019) ZAGPPHC (15 February 2021), it was held that even though the VDP provisions in the TAA did not grant relief in respect of interest on the additional tax payable pursuant to the successful VDP application, it does not prohibit a successful VDP applicant from requesting the remittance of the interest.

Note that the judgement dealt specifically with a request for remission of interest in terms of section 39(7) of the VAT Act, after declaration of a VAT default under the VDP.

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