Snapshot of the Voluntary Disclosure Process and recent developments

The Voluntary Disclosure Process (“VDP”) is a formal and objective process whereby taxpayers are able to disclose historical tax defaults and omissions to the South African Revenue Service (‘SARS”).

A ‘default’ in this context may include the submission of inaccurate or incomplete information (including historical tax returns), or the failure to submit required information to SARS, across any tax type administered by SARS (excluding customs and excise duties which is dealt with in isolation).

In terms of section 227 of the Tax Administration Act No 28 of 2011 (“TAA”), a disclosure will qualify for VDP relief if it meets the following key requirements:

  • It must be voluntary;
  • The default must not have been previously disclosed;
  • The disclosure must be full and complete in all material respects;
  • The default must involve the potential application of an understatement penalty;
  • The disclosure must not result in a refund being due by SARS; and
  • It must be submitted in the prescribed form and manner.

Key benefits of a VDP

Participating in a VDP offers significant advantages to taxpayers seeking to correct past non-compliance including:

  • Protection from criminal prosecution provided full disclosure is made; and
  • Potential remission of up to 100% of applicable administrative non-compliance penalties and understatement penalties.

However, interest related to the disclosed defaults has historically remained payable.

Recent developments: 2026 Budget Proposal

During the 2026 Budget Speech, delivered by Finance Minister Enoch Godongwana, an important development relating to the VDP was announced. National Treasury has proposed an amendment to the TAA to allow taxpayers submitting a VDP application to simultaneously apply for the remission of interest on the disclosed tax defaults, in terms of the relevant tax legislation.

The proposal further mentioned that:

  • The request for interest remission must be submitted at the same time as the VDP application; and
  • The amendment is intended to apply to VDP applications submitted on or after 1 March 2026, without impacting applications already in progress.

Conclusion

The proposed changes represent a meaningful enhancement to the VDP framework, potentially making it a more accessible and attractive option for taxpayers seeking to regularise their tax affairs. By allowing for the simultaneous consideration of interest remission, the revised approach may reduce the overall financial burden associated with voluntary disclosures.