SARS VDP Requirements

A SARS VDP application will only be successful if it meets the following requirements:

The disclosure must be voluntary

The VDP program is no longer a viable option after SARS has identified any non-compliance through their own audit procedures. In these cases, Xelous will assist and support in identifying other legal avenues for a successful dealing with SARS and minimizing tax liabilities.

The disclosure is full and complete in all material respects

Xelous will assist the taxpayer to provide a thorough and honest account of all relevant tax defaults. Here is what this entails:

1. Comprehensive Information: The taxpayer is required to disclose all relevant information regarding their tax defaults. This includes not only the amounts of undeclared income or overstated deductions but also the circumstances leading to these defaults. The disclosure should leave no significant aspects of the tax non-compliance undisclosed.
2. Accuracy: The information provided must be accurate to the best of the taxpayer’s knowledge and belief. It should be supported by factual documentation.
3. Relevant Tax Periods and Types: The disclosure must cover all tax periods and types affected by the non-compliance. For example, if a taxpayer has undeclared income affecting both income tax and value-added tax (VAT), both must be disclosed.
4. Materiality: The term “in all material respects” refers to the importance of the information to the understanding of SARS regarding the nature and extent of the tax default. Information is considered material if its omission or misstatement could influence the decisions or assessments made by SARS based on the disclosure.
5. No Selective Disclosure: Taxpayers cannot choose to disclose only certain defaults while concealing others. The requirement for the disclosure to be full and complete means that selective disclosure is not acceptable, and all relevant defaults must be disclosed to qualify for the benefits of the VDP.

The disclosure involves a default which has not occurred within five years of the disclosure of a similar default

A repeat non-disclosure will not be allowed under the VDP. Xelous can assist in design and implementation of tax compliance systems. This includes:

• Regular tax compliance check-ups
• Personalized advisory services for ongoing tax planning and risk management

The disclosure involves a Behavior referred to in the understatement penalty table in Section 223 of the Tax Administration Act

The behaviors listed in the understatement penalty table are as follows:

• Substantial understatement
• Reasonable care not taken in completing return
• No reasonable grounds for “tax position” taken
• Impermissible avoidance arrangement
• Gross negligence
• Intentional tax evasion

An application not involving at least one of these behaviors will not be a valid voluntary disclosure.

The disclosure would not result in a refund due by SARS

An application relating to more than one tax period will be considered on the net position of the default over these tax periods for purposes of determining whether a refund is due by SARS.

The disclosure is made in the prescribed form and manner

Xelous will complete and submit the application form (VDP01) on behalf of the taxpayer.