Vdp Agreement with Sars

VDP Agreement with SARS: What You Need to Know

As a taxpayer, it’s important to be aware of the different avenues available to you when it comes to managing your income tax affairs. One such avenue is the Voluntary Disclosure Programme (VDP), which allows taxpayers to come clean about any tax affairs that were not previously disclosed to SARS. In this article, we’ll take a closer look at the VDP and what the process entails.

What is the VDP?

The VDP is a programme initiated by SARS to encourage taxpayers to disclose any defaults before SARS discovers them. This is aimed at taxpayers who may have undisclosed tax liabilities, either due to an error on their part, or because they have deliberately avoided paying taxes. The main goal of the VDP is to help taxpayers become compliant with South African tax laws, while also helping SARS to collect revenue that is owed to the government.

Why is the VDP important?

The importance of the VDP lies in the fact that it affords taxpayers the opportunity to avoid criminal prosecution, hefty penalties and even imprisonment. By voluntarily disclosing their tax defaults, taxpayers can regularise their tax affairs and avoid being audited or investigated by SARS. This means that they can avoid the risk of being fined, penalised, or even prosecuted for non-compliance.

What does the VDP process entail?

The VDP process is divided into three main stages – the pre-disclosure stage, the disclosure stage and the agreement stage. During the pre-disclosure stage, taxpayers can approach SARS for assistance in determining whether they have any undisclosed tax liabilities. This can be done anonymously and without fear of any penalties.

Once the taxpayer has determined that they have undisclosed tax liabilities, they can proceed to the disclosure stage. Here, they must provide SARS with a full and accurate disclosure of all their tax affairs, including any defaults and other relevant information. This disclosure must be made within a reasonable time and must be done in writing.

After the disclosure has been made, SARS will evaluate the taxpayer’s case and assess the amount of tax liability that is owed. If an agreement is reached between the taxpayer and SARS, the agreement stage will be entered into. During this stage, the taxpayer will be required to fulfil their obligations as outlined in the agreement.

In summary, the VDP is an important avenue for taxpayers to regularise their tax affairs and avoid criminal prosecution and stiff penalties. By following the three stages of the VDP process, taxpayers can proactively disclose any defaults and work towards becoming compliant with South African tax laws. If you have undisclosed tax liabilities, speak to a tax professional to find out more about VDP and how it can help you.