The Voluntary Disclosure Programme
Share Article
The Voluntary Disclosure Programme: When to Use It, and Why Timing Is Everything
If your tax affairs aren’t quite in order, the window to fix them on favourable terms is narrower than you might think.
Most people with a historic tax problem know they have one. It might be an offshore account that was never declared, rental income left off a return, crypto gains, or a trust that hasn’t been properly administered.
The Voluntary Disclosure Programme (VDP) exists for exactly this situation. It only works, however, if you use it before SARS finds the problem first.
What the VDP offers
| Behaviour | If SARS finds it | VDP before audit notice |
|---|---|---|
| Substantial understatement | 10% | 0% |
| Reasonable care not taken | 25% | 0% |
| No reasonable grounds for position | 50% | 0% |
| Impermissible avoidance arrangement | 75% | 0% |
| Gross negligence | 100% | 5% |
| Intentional tax evasion | 150% | 10% |
These are the understatement penalty rates under section 223 of the Tax Administration Act. A successful applicant also gets 100% relief from administrative penalties (other than late-filing penalties) and protection from criminal prosecution. You still pay the tax and interest, but the penalties, which are usually the largest part of the bill, fall away or are reduced sharply.
Why now
SARS already knows more than you think. Through the Common Reporting Standard, SARS receives information on South Africans’ offshore bank and investment accounts, and the Crypto-Asset Reporting Framework took effect on 1 March 2026. Once SARS has your information and is aware of your default, a disclosure is no longer voluntary.
The “voluntary” test is now stricter. Under SARS’s updated guide of May 2026, a formal audit notice automatically disqualifies you, and discovering a default because of a verification or inspection may also fail the test. You can no longer wait for SARS to make contact and then apply.
Old years are not necessarily safe. SARS’s view is that an application may extend into periods taxpayers assume have prescribed.
When to consider the VDP
You should consider an application if you have:
- Undeclared offshore income or assets
- Undeclared crypto gains
- Rental or side income left off your returns
- Trust irregularities, such as undeclared distributions or Section 7C loans not accounted for
- Claimed non-residence without formally ceasing tax residency
- Business defaults, such as undeclared VAT, PAYE or income
When it isn’t the answer
- SARS has already notified you of an audit into the issue. You are probably too late, although a senior official may still allow it, at reduced relief.
- The disclosure would produce a refund. Refunds are excluded.
- You disclosed a similar default within the last five years. Repeat disclosures don’t qualify.
- The problem is customs or excise duty. That falls under a separate framework.
Can SARS reject you and then come after you?
Yes, and this is the most important thing to understand before you apply.
If your application is rejected, SARS now knows about the default. Nothing in the Act stops it auditing you and applying the full penalties. The safeguard is the no-name application: you can first apply without revealing your identity, and SARS will give a non-binding opinion on whether you’re likely to qualify.
If relief is granted but you left something out, SARS can withdraw it. A senior SARS official may withdraw the relief, treat what you’ve paid as part payment of a larger debt, and pursue prosecution. Relief also only covers the defaults actually set out in the agreement.
Once signed, the agreement is final. The assessments that give effect to it can’t be objected to or appealed, and courts have confirmed that you can’t reopen its terms later.
The bottom line
The VDP rewards those who act first, and act fully. Every month you wait, interest grows and SARS’s data improves. A partial or poorly prepared disclosure can leave you worse off than not applying at all.
Unsure whether the VDP is right for you? A confidential, no-obligation discussion is the best first step. Book a consultation.
