Major SARS gift for taxpayers

SARS has expanded and clarified its Voluntary Disclosure Programme (VDP) rules, providing a major boost to taxpayers seeking to resolve historic tax defaults, but there is still uncertainty regarding interest on unpaid taxes.

The South African Revenue Service (SARS) has issued a substantially expanded new Guide to the Voluntary Disclosure Programme, dated 21 May 2026.

This has materially broadened its published interpretation of the VDP under Chapter 16 of the Tax Administration Act (TAA).

Tax Consulting South Africa’s Head of Tax Controversy & Dispute Resolution, André Daniels, explained that at first glance, the updated guide appears to be a positive development for taxpayers and practitioners alike.

“It provides significantly more technical and interpretative guidance than the previous 2025 guide and offers greater clarity on several practical areas, which have historically caused uncertainty in VDP matters,” he said.

The VDP was introduced to increase voluntary compliance in the interest of enhanced tax compliance, good management of the tax system, and the best use of SARS resources.

It is intended to encourage taxpayers to voluntarily disclose tax defaults. Now, SARS has materially expanded its commentary on qualification requirements, Daniels said.

However, that prescription and understatement implications, one of the most commercially significant issues facing taxpayers today, remains entirely absent from the guide, namely the remission of interest in VDP matters.

“That omission may ultimately prove to be one of the most important aspects of the new guide,” Daniels warned.

The previous SARS VDP guide was largely operational and process-driven, focusing primarily on eFiling mechanics, VDP01 completion, workflow processes and supporting document uploads.

According to Daniels, the newly issued guide is materially different. The revenue service now deals extensively with the following:

• What constitutes a “default”
• Inaccurate and incomplete disclosures
• The adoption of tax positions
• Understatement implications
• Voluntariness requirements
• Audits versus verifications
• Prescription under section 99
• Qualification requirements under section 227 of the TAA

“This is not merely an administrative update, but a substantial expansion of SARS’ interpretation of how the VDP framework is intended to operate in practice,” Daniels said.

Old tax issues still firmly on SARS’s radar

Importantly, Daniels explained that the taxman now expressly distinguishes between audits, verifications, and inspections.

This makes it clear that a verification process does not automatically constitute an “audit” for purposes of section 226(2) of the TAA.

This is an important practical clarification because many taxpayers mistakenly assume that any SARS engagement immediately disqualifies them from seeking VDP relief.

However, SARS also makes it clear that where a taxpayer becomes aware of a default through a verification or inspection process, the disclosure may nevertheless fail the “voluntary” requirement.

Whether this happens depends on the facts and circumstances of the case. “In practice, this means taxpayers can no longer assume that waiting for SARS engagement before taking action will preserve access to VDP relief,” Daniels explained.

The updated guide also introduces more extensive discussion regarding prescription and the taxman’s ability to reopen historic tax periods.

SARS confirmed its view that VDP applications may extend into periods which taxpayers may otherwise regard as prescribed.

In particular, this can occur where non-disclosure, misrepresentation, or material omissions may permit SARS to invoke section 99 of the TAA, Daniels noted.

“This is particularly significant given the increasing number of historic offshore, trust, crypto asset and cross-border matters currently surfacing through SARS’ enhanced data collection and third-party reporting systems,” he said.

“Many taxpayers continue to operate under the mistaken assumption that the mere passage of time protects historic non-compliance from scrutiny, but the new guide strongly suggests otherwise.”

No clarity on interest remission

According to Daniels, perhaps the most notable aspect of the new SARS voluntary disclosure guide is what it does not say.

“Despite materially expanding its commentary across numerous technical VDP issues, SARS remains entirely silent regarding the remission of interest within the VDP framework,” he said.

“This is striking given the Constitutional Court’s decision in Medtronic International Trading S.A.R.L, which exposed the legislative limitations surrounding simultaneous VDP and interest remission relief.”

Following that judgment, the National Budget Review indicated that legislative amendments are anticipated to permit taxpayers to seek remission of interest together with VDP relief in certain circumstances.

Against that backdrop, Daniels said many taxpayers and practitioners expected SARS’s updated guide to provide at least some operational or procedural clarity regarding:

• Whether SARS will entertain simultaneous interest remission requests
• How such requests should be submitted
• Whether separate applications will be required
• How SARS intends to implement the anticipated legislative amendments in practice

“Instead, the guide says nothing. That silence is commercially significant,” Daniels said.

He explained that, in many substantial VDP matters, the financial exposure is not necessarily the capital itself, but rather the accumulated interest arising over multiple years of historic non-compliance.

“For many taxpayers, the uncertainty surrounding interest remission may materially impact whether disclosure remains commercially viable at all,” he said.

SARS keeps quiet – on purpose

Daniels said the omission is difficult to ignore because the guide otherwise materially expands SARS’ interpretative commentary throughout.

SARS devoted substantial attention to qualification requirements, voluntariness, audits versus verifications, understatement mechanics, tax positions, and prescription implications.

“The complete absence of any meaningful discussion regarding interest remission thus appears unlikely to be accidental,” Daniels said.

“This most probably indicates either that SARS is awaiting formal legislative implementation before issuing guidance or that internal policy alignment regarding simultaneous VDP and interest remission applications remains unresolved.”

Either way, Daniels said, taxpayers currently considering disclosure remain exposed to uncertainty regarding one of the largest financial components of historic tax defaults.

He added that the updated guide must also be viewed within the context of SARS’ broader enforcement environment.

SARS’ visibility into historic non-compliance is rapidly expanding, thanks to increased funding, enhanced data analytics, financial institution reporting obligations, cross-border information exchange mechanisms, cryptocurrency tracing capabilities, and Project AmaBillions enforcement initiatives.

“The practical reality is that historic defaults are becoming increasingly difficult to conceal indefinitely,” Daniels explained.

“For many taxpayers, the VDP framework remains one of the few available mechanisms to regularise historic defaults before SARS commences formal enforcement action.”

The updated guide also reinforces that the VDP process is a highly technical legal process requiring careful consideration of qualification requirements, prescription exposure, understatement implications, voluntariness risks, audit status, and broader strategic considerations.

“Taxpayers should therefore approach VDP applications carefully and strategically, particularly where substantial historic exposures or complex cross-border structures are involved,” Daniels urged.

He said the new guide ultimately provides valuable insight into SARS’ evolving interpretation of the VDP framework.

However, its silence on interest remission confirms that one of the most commercially important aspects of the modern VDP landscape remains unresolved.