Offshore tax defaulters can now come clean

Individuals and corporate entities who took funds offshore illegally and those who defaulted on their tax affairs now have the opportunity in terms of the Voluntary Disclosure Programme, to regularise their affairs in instances where Exchange Control contraventions or tax defaults have occurred. The Minister of Finance announced the VDP in his Budget Speech on 17 February 2010 and confirmed that it would begin this month in his Medium Term Budget Policy Speech (MTBPS) on 27 October 2010. Under the tax component of the VDP administered by Sars, successful applicants who meet the requirements will benefit from interest, penalty and additional tax relief (excluding administrative penalties for the late submission of returns and late payments of tax) and criminal prosecution will not be initiated against them by Sars regarding the disclosed defaults. However, the initial tax amount must still be paid in full. In addition, the Tax VDP allows for prospective applicants to make an initial “no-name” disclosure in order to obtain a non-binding opinion from Sars as to whether the applicant would qualify for relief and the extent of any relief. Full details are available on the Sars website.