Finance Minister Pravin Gordhan in his Budget Speech of 17 February 2010 announced a Voluntary Disclosure Programme (VDP).
The VDP gives both individuals and corporates an opportunity to disclose and regularise past tax defaults and/or Exchange Control (Excon) contraventions. The VDP application window opened on 1 October 2010 and will close at the end of October this year, ie in approximately two months time. Hence time is of the essence for those individuals and corporates still considering their options. Indications from SARS and SARB are that it's unlikely that the application window would be extended. It should be noted that the current VDP program does not "cross-reference" to the 2003 Amnesty at all. That means that 2003 Amnesty applicants can also apply under the current VDP to regularise Excon contraventions and tax defaults in respect of which no disclosure was made during the 2003 Amnesty process. Because the 2003 process only gave amnesty in relation to the items actually disclosed, it means that applicants who only made "partial" disclosure during 2003 can now regularise the remainder. Applying under the current VDP dispensation also does not jeopardise the amnesty gained in 2003 since the 2003 information has been ring-fenced.
The Cliffe Dekker Hofmeyr Tax team has thus far processed, lodged and finalised numerous VDP applications in both the SARS channel (Tax VDP) and the SARB FinSurv channel (Excon VDP).
Many applications involved SA-resident individuals having off-shore bank accounts into which funds had been deposited in contravention of the applicable Excon Regulations. The income earned had also not been declared to SARS.
Other applications involved large coporates that had eg pay-roll defaults or that had erroneously under-declared certain income, alternatively, claimed expenditure not deductible for tax purposes.
The processes on both the SARS and SARB sides are working well and Cliffe Dekker Hofmeyr's interactions with staff in both those organisations have been constructive. This is especially the case in regard to the more complex VDP applications where policy considerations had to be canvassed with SARS and/or SARB in order to achieve the outcome as intended under the relevant VDP statutory dispensation.
Johan van der Walt