South Africa’s proposed Voluntary Disclosure Programme (VDP) for customs and excise marks a decisive shift in the South African Revenue Service’s (Sars) revenue and compliance posture. It is both a necessary modernisation and a welcome policy correction.
Despite current laws requiring traders to notify Sars customs and excise if their filings are inaccurate — facing potential penalties or even forfeiture of up to three times the goods’ value — these rules do not go far enough to protect traders.
There are still significant risks of penalties and forfeiture, as the legislation lacks clear safeguards for those seeking to correct past mistakes.
Although the Sars tax VDP has been available under the Tax Administration Act (TAA) since 2011, customs and excise matters have always been excluded from its scope. Customs and excise traders and practitioners have had to wait until now for their sector’s formal customs and excise VDP.
The Customs Control Act of 2014, though not yet in effect, already includes provisions that allow defaulters to benefit from voluntary disclosure relief.
Bringing elements of the act into the current customs and excise legislative framework is not new — similar approaches have enabled modernisation in platforms such as registration, licensing, accreditation and reporting of goods and conveyances platforms, especially when swift action was needed.
As the need intensifies to enhance compliance, to close existing gaps, and reinforce trust in customs and excise systems, introducing a formal customs and excise VDP for traders is a significant step for advancing revenue management in South Africa.
Ambiguity to assurance
Historically, the lack of a formal customs and excise VDP left a significant policy gap. Traders and advisors aiming to correct past errors— such as retroactive price updates or transfer pricing adjustments — often faced inconsistent and informal responses from Sars branches.
Officials sometimes made it clear: in the absence of a structured programme, those who came forward voluntarily couldn’t rely on meaningful safeguards. This uncertainty discouraged many businesses, particularly those considering initiatives like the Authorised Economic Operator (AEO) programme, from making honest disclosures.
The risk was obvious — by coming clean, traders exposed historic compliance vulnerabilities without any intent of protection — a risk few were willing to accept.
The customs and excise VDP finally changes this equation, providing a uniform, predictable path for voluntary disclosure.
Importantly, it dovetails with obligations already set out in customs and excise law that require traders to promptly alert Sars of any errors or inaccuracies regarding tariff, value or origin.
With the customs and excise VDP, this legal duty is now linked to actual incentives and tangible protection, making openness not just a risk but also an opportunity.
The ‘missing middle’
Sars has shown increasing sophistication in segmenting its compliance strategy.
Traders are not seen as a homogeneous bloc: there are the consistently compliant, the unwilling evaders, and the "missing middle" — those who want to do right but haven’t had a safe, practical route to regularise legacy risks.
The customs and excise VDP is, above all, a tool crafted for this important segment. By giving these traders both certainty and an explicit incentive to come forward, Sars frees up resources to focus on truly recalcitrant cases. This aligns perfectly with Sars’ third strategic objective, which is to "detect taxpayers and traders who do not comply, making non-compliance hard and costly".
The notable rise in personal liability assessments and more assertive enforcement recently is a direct consequence of this strategic pivot — complementing the customs and excise VDP, not replacing it.
Gaining traction
Evidence from the tax VDP shows clear momentum for disclosure-based compliance. In the last fiscal year alone, Sars’ tax VDP secured R3.3bn in recoveries.
Although customs and excise disclosures may not generate equivalent figures, the potential remains significant as traders grow more confident in a transparent and trustworthy system.
Previously, informal disclosures—especially regarding nuanced issues like price adjustments — left businesses exposed to uncertainty and risk. Now, with the customs and excise VDP in place, the landscape is transformed: traders at last have the certainty and consistency needed to come forward, making the process a fairer one for all.
Persistent concerns about "opening a can of worms" have long discouraged businesses from fully engaging with the Authorised Economic Operator programme, as many were wary of voluntarily revealing compliance risks to Sars.
The introduction of the customs and excise VDP offers reassurance, providing a structured avenue for disclosure without fear of undue consequences.
Clear roadmap
The introduction of the customs and excise VDP marks a fundamental shift, moving South Africa away from piecemeal solutions toward a well-defined playbook for compliance.
No longer do traders have to navigate an ambiguous, inconsistent landscape; instead, they are offered clarity, fairness, and a credible means to resolve past issues.
Sars’ approach signals a new era — one in which compliant, competitive trade is actively encouraged, and honest traders are seen as partners in building a strong customs and excise system.
The real benefit extends beyond the immediate recovery of revenue.
By fostering a smarter, more collaborative, and adaptable customs and excise ecosystem, South Africa stands to enhance its business climate, grow its base of compliant taxpayers, and drive more reliable revenue streams. These gains are crucial for funding essential public investments— infrastructure for water, energy, and logistics — that underpin long-term economic growth.
• Ramatlhodi is partner and Africa indirect tax leader at Deloitte Africa, Tax & Legal
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