South Africa’s proposed customs Voluntary Disclosure Programme: What the 2026 Budget could mean for importers and exporters

The introduction of a customs VDP marks a pivotal moment for South African businesses engaged in cross-border trade. While VDPs have long been a feature of the tax landscape—enabling taxpayers to address historic non-compliance without the fear of criminal prosecution or excessive penalties—the absence of a structured VDP for customs has left many businesses in a precarious position, lacking clear assurances or protection when seeking to correct past errors.

Extending the VDP to customs is a logical progression, given the increasing complexity of cross-border trade, the prevalence of technical errors, and the need for the South African Revenue Service (SARS) to balance enforcement with facilitation. Once implemented, this initiative could mark a significant and positive shift in the relationship between SARS and importers or exporters, with far-reaching implications for compliance, revenue collection, and business certainty.

Once implemented, a customs VDP could fundamentally reset the relationship between SARS and the trading community, with meaningful implications for compliance, revenue collection and business certainty.

Key features expected

While the final details are pending, the proposed VDP under Chapter XB of the Customs Act is expected to:

• Allow importers and exporters to voluntarily disclose previous customs and excise non-compliance, such as misclassification, undervaluation, or incorrect origin declarations.
• Offer relief from criminal prosecution and, in certain cases, a reduction or waiver of penalties and interest, provided the disclosure is full and honest.
• Operate for a limited period, encouraging early engagement and swift resolution of legacy issues.
• Provide a clear process for voluntary disclosure, aligning South Africa with international best practice and offering traders a credible route to regularise their affairs.

The proposed customs VDP is closely aligned with SARS’ 2020–2025 Strategic Plan, which prioritises voluntary compliance, modernisation, and building public trust. By providing a clear and accessible route for traders to regularise past customs and excise errors, the VDP supports SARS’ objectives to offer clarity and certainty, make compliance easier, and focus enforcement resources on deliberate non-compliance. It also complements SARS’ digital transformation efforts and commitment to stakeholder engagement, helping to close the tax gap and facilitate legitimate trade. Ultimately, the VDP advances SARS’ vision of a smart, modern revenue authority that enables sustainable economic growth and strengthens public confidence in the tax system.

Against this strategic backdrop, the customs VDP is expected to deliver several key benefits:

1. Enhanced compliance culture:

A well-structured VDP will incentivise businesses to proactively address historical errors, thereby improving overall compliance levels in the customs environment.

2. Increased revenue collection:

By encouraging voluntary disclosures, SARS stands to benefit from additional revenue that might otherwise remain undisclosed, supporting the government’s fiscal objectives.

3. Improved certainty for business:

The VDP will provide a clear pathway for businesses to regularise their affairs, reducing the risk of future audits, disputes, and reputational damage.

4. Alignment with global best practice:

Many jurisdictions have implemented similar programmes with positive results. South Africa’s adoption of a customs VDP will enhance the country’s reputation as a business-friendly destination, aligned with international standards.

For a VDP to be credible and effective, certain design features will be critical. In particular, SARS will need to:

Clearly define the scope of relief, qualifying periods and eligibility criteria, including any exclusions;

Maintain confidentiality and offer strong protection against future enforcement actions for the periods disclosed, provided that the disclosure is honest and complete; and

Provide practical and adequate guidance, with examples as well as frequently asked questions to support businesses and advisors in evaluating whether and how to participate.

The proposed customs VDP represents a progressive step towards modernising South Africa’s customs administration and recalibrating the compliance framework for cross-border trade. As we await further details in the 2026 National Budget, businesses should begin now by:

• Conducting targeted reviews of their customs compliance history, including tariff classification, valuation, origin and warehouse regimes;
• Identifying historic risk areas and quantifying potential exposures that may be suitable for disclosure; and
• Develop an internal governance and decision-making framework for potential VDP participation, including board and executive committee approvals where required.