SARS relief possible for South African businesses comes with a catch

A proposed new voluntary disclosure programme (VDP) for customs and excise underpayments could give importers and manufacturers a chance to avoid penalties and prosecution if they disclose errors early and honestly.

Tax Consulting SA’s Head of Tax Controversy & Dispute Resolution, André Daniels, explained that for years, South Africa’s VDP has allowed taxpayers to correct past defaults.

The Tax Administration Act (TAA) allows corrections to be made on Income Tax, Value-Added Tax (VAT), Pay-As-You-Earn (PAYE), and other mainstream taxes.

However, some of the riskiest and most heavily penalised areas of non-compliance, Customs and Excise, were often left outside the framework. “That gap is finally closing,” Daniels said.

The 2025 Draft Tax Administration Laws Amendment Bill (TALAB), published for comment on 16 August 2025, proposes a groundbreaking reform.

This Bill proposes several relief measures for taxpayers. For example, one proposal suggests amending section 164 of the TAA.

For the first time, the law will expressly recognise that a taxpayer who requests a reduced assessment under section 95(6) of the TAA may apply for a suspension of payment of the tax charged based on an estimated assessment.

The TALAB also proposes inserting Chapter XB into the Customs and Excise Act. This chapter would create a dedicated voluntary disclosure relief programme for customs and excise contraventions regarding underpayments.

Daniels explained that the new framework casts a wide net of what constitutes an underpayment. An “underpayment” covers not only unpaid or underpaid customs and excise duty, but also:

• Submissions that are inaccurate, incomplete, or missing altogether
• Improper claims for rebates, refunds, or drawbacks knowingly made without entitlement
• VAT shortfalls on imported goods
• VAT on locally manufactured goods that are subject to excise duty, the health promotion levy, or environmental levies

“In practice, this means both importers and domestic manufacturers will have a structured way to regularise defaults that might otherwise attract severe penalties or even criminal prosecution,” Daniels said.

However, he warned that the relief this programme could provide has a significant catch that taxpayers should be aware of.

The catch

Daniels said a successful applicant who steps forward before the South African Revenue Service (SARS) comes knocking can secure meaningful relief.

In return for full disclosure and payment of outstanding duties and interest, the Commissioner of SARS will:

• Undertake not to pursue criminal charges
• Remit penalties
• Waive forfeiture amounts that would otherwise apply
• Extend relief similar to that already available under the general VDP in the TAA

However, he warned that timing and honesty are crucial parts of obtaining this relief, and once an audit, investigation, or enforcement action has started, SARS could decide that the disclosure concerns matter outside the scope of those actions.

“Disclosures must be voluntary, complete, and not designed to generate refunds. If material facts are omitted, SARS may withdraw the relief entirely, leaving the taxpayer worse off and with penalties imposed,” Daniels said.

Customs and excise non-compliance has always been high-stakes, since penalties can cripple businesses and reputational damage can be devastating.

“Until now, there was no clear compliance ‘escape hatch’ once errors were made. The new proposed VDP will offer a second chance, but it is one that must be seized early and honestly,” he said.

Daniels urged import, export, and manufacturing businesses to review their customs and excise positions urgently.

“For those who identify historical underpayments, once enacted, the VDP under the customs and excise regime presents an opportunity to come clean before enforcement actions escalate,” he said.

Daniels offered similar advice to taxpayers who may expect relief from TALAB’s proposal to suspend payment on estimated SARS assessments.

“The proposed amendment to section 164 should not be read as comfort, but as confirmation that SARS’ collection net tightens swiftly and ruthlessly,” he warned.

“Taxpayers who gamble with deadlines, even briefly, risk financial ruin at the hands of an authority whose mandate is to collect at all costs.”