The unique opportunity that the VDP provides for taxes other than those governed by the provisions of the Customs and Excise Act no 91 of 1964 (“the Customs Act”) will be extended, and a similar formal framework will soon be available to taxpayers involved in imports, exports, and manufacturing of excisable goods.

The 2025 Draft Tax Administration Laws Amendment Bill is currently open for public comment, and a key proposed amendment relates to the introduction of a VDP under Chapter XB of the Customs Act.

The envisaged VDP will provide taxpayers with a legislative framework to formally engage SARS to voluntarily disclose non-compliance on activities and transactions that have been identified and that has resulted in an underpayment of customs duty, excise duty, environmental levies, health promotion levies, and VAT levied on imports and excise-related transactions.

Of importance and what needs to be noted is that the term “underpayment” will have a specific statutory definition, i.e.:

"underpayment" means a non-payment or underpayment of duty, due to the submission of inaccurate or incomplete information or the non-submission of information to the Commissioner, and includes the claiming of any rebate, drawback, refund or payment or the setting off of any amount in terms of the provisions of section 77(a) to which the claimant was knowingly not entitled under this Act, and "underpay" has a corresponding meaning.

The proposed process closely mirrors the existing VDP under the Tax Administration Act 28 of 2011, requiring that the disclosure be voluntary, fully transparent, comply with prescribed rules, not be made within five years of a similar disclosure, and not result in a refund or drawback to the taxpayer.

Taxpayers must be cognisant of the fact that the proposed VDP will not be available in instances where SARS has already notified a taxpayer of a forthcoming audit or investigation related to such an underpayment.

Given the complexity of customs and excise-related matters, it is proposed that, in certain cases, an application for a tariff, value, or origin determination may also be required as part of the VDP process.

Relief under the VDP framework would include exemption from penalties, forfeiture, and prosecution, subject to certain eligibility and compliance requirements.

The proposed legislative amendments also provide for non-binding private opinions on VDP eligibility for taxpayers who wish to remain anonymous. The latter would assist taxpayers in assessing the risks associated with a specific VDP application prior to initiating it. 

It needs to be emphasised, however, that the scope and nature of any VDP revolves around the utmost good faith of the taxpayer to fully disclose the circumstances that resulted in the underpayment. Any failure to do so would negate any protection afforded to taxpayers within the proposed legislation.

The proposed legislation specifically provides for circumstances where SARS could withdraw the voluntary disclosure relief if the applicant failed to disclose a matter that was material for purposes of making a valid voluntary disclosure. In this regard, it is important to obtain proper legal guidance on how any application to SARS should be framed to ensure that cognisance is taken of all the risks associated when submitting a VDP application.

The draft legislation is currently open for public comment until 12 September 2025. While not yet in effect, this development signals a major shift in the customs and excise compliance landscape and offers a potential avenue for regularising historical defaults.