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South Africa Issues Tax Amnesties Update

by Lorys Charalambous,, Cyprus

11 August 2014

The South African Revenue Service (SARS) has explained the current position with regard to the processing of Voluntary Disclosure Program (VDP) applications, both under the initial program (VDP1), which expired on October 31, 2011, and the permanent program (VDP2).

VDP1 attracted in excess of 18,000 applications, and the last eight of those applications are currently in the process of finalization. More processing capacity has become available as resources from VDP1 were freed up, and this has significantly increased the average number of cases finalized per working day from 6.9 during 2013 to the current 27 cases per day.

The VDP unit is currently processing applications received during May and June 2014. The current turnaround time should further fall to about 31 working days per case in the next four months.

It has also been specified that corrected or amended 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, understatement or non-compliance penalties that are eligible for VDP relief will be waived when the application is processed and a VDP agreement concluded.

In addition, it has been re-confirmed that late submission or late payment penalties or interest are not eligible for VDP relief. These must be paid on assessment.

The main aim of South Africa's VDP program is to encourage taxpayers to come forward on a voluntary basis to regularize their tax affairs with SARS and avoid the imposition of understatement penalties and other administrative penalties, "to enhance voluntary compliance in the interest of the good management of the tax system and the best use of SARS' resources."

The VDP is therefore applicable to all taxes administered by SARS (excluding customs and excise), but a person who is aware of a pending audit or investigation, or of an audit or investigation that has commenced but has not yet been concluded by SARS, is excluded.

TAGS: individuals | South Africa | compliance | tax | tax compliance | law | tax authority | penalties | Africa

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