South Africa


  • Service: Tax, Indirect Tax
  • Type: Business and industry issue
  • Date: 2011/06/06

Indirect Tax

The KPMG Indirect Tax business unit comprises of the VAT Consulting, VAT Compliance, Trade and Customs practice lines. Identifying and secure indirect tax recoveries in South Africa.

Tax and Excon Voluntary Disclosure Programme (South Africa) 

The Minister of Finance, Pravin Gordhan, announced the Tax and Excon Voluntary Disclosure Programme (VDP) in his budget speech in February 2010. The tax VDP is not a complete tax amnesty (as in 2003). The VDP aims to encourage applicants to disclose defaults, giving them the opportunity to regularise their tax affairs and any contraventions of the Exchange Control Regulations.

Under the VDP, taxpayers can make voluntary disclosure of all unpaid taxes administered by SARS in a grace period of one year. The VDP applies to tax defaults before 17 February 2010 and is effective from November 2010 to October 2011.


The VDP provides relief from additional tax, interest and penalties and criminal prosecution by SARS, but excludes so-called ‘smaller’ penalties imposed on late payment of tax or late submission of a return. The waiving of the ‘smaller’ penalties can still be applied for under the normal penalty provisions of the various tax legislations.


A tax default includes the submission of inaccurate or incomplete information to SARS and failure to submit information or the adoption of a tax position where such submission, non-submission or adoption resulted in the taxpayer not being assessed for the correct amount of tax, or the correct amount of tax not being paid, or an incorrect refund being processed.


Applications must be voluntary, disclosure must be complete in all material respects, must be made in the form, manner and period prescribed by SARS, and should not result in a refund to the applicant. Applications must include relevant personal and tax contact details, reasons for the omission or non-compliance and provide an explanation of how the requirements have been met. Taxpayers can apply for a non-binding no-name basis ruling to establish whether they will qualify.


If SARS is conducting an audit or has advised the taxpayer that it will start an audit, the VDP does not apply, unless the taxpayer satisfies SARS that the default will most likely not have been identified by the audit and SARS considers that partial relief will be in the best interest of good tax administration.


Partial relief entails 50% interest, a 100% penalty (except penalty for late payment or late submission of returns), no additional tax and no criminal prosecution by SARS. However, SARS can withdraw the relief if full disclosure has not been made.


VAT vendors can apply under the VDP to address defaults arising from, or in respect of:


  • output tax
  • input tax
  • change in use adjustments
  • inter-company supplies, such as provision of staff
  • imported services
  • exempt supplies (eg, interest) and ‘non-supplies’
  • apportionment
  • time and value of supply.


SARS prefers receiving applications through e-filing to cater for the numbers of taxpayers (probably in excess of 800) who want to apply for the VDP relief.



Ferdie Schneider
Director, Indirect Tax
Value-Added Tax
Tel: +27 (0)11 647 8686