A voluntary disclosure process is of considerable importance in the administration of a Tax system to enable a Taxpayer to correct past filings and deficiencies. Failure to provide for such an approach to the Tax Administration may often perpetuate a Taxpayer's deficiencies, and encourage the Taxpayer to continue with this course of conduct. The process must be accessible, confidential, well-known, and free of recrimination. At the same time, the process should not be viewed as an amnesty, or enable a Taxpayer to obtain a materially better result than might have been the case had the Taxpayer been compliant. Thus, a delicate balance is necessary to ensure that the Tax system is fair, encourages and increases voluntary compliance, but does not allow a Taxpayer to unduly obtain a benefit from non-compliance.
- A confidential process shall exist whereby a Taxpayer may come forward voluntarily to a Tax Officer to correct deficiencies in past Tax Filings, whether the deficiencies were wilful and deliberate evasion, done in circumstances amounting to gross negligence, negligence, or carelessness or through inadvertence or otherwise.
A voluntary disclosure type of process shall exist whereby a Taxpayer may come forward voluntarily to correct deficiencies in past filings. This shall apply whether the deficiencies are deliberate or not, done in circumstances amounting to gross negligence, negligence, or carelessness or through inadvertence. When using the voluntary disclosure process, a Taxpayer shall act truthfully to detail the circumstances for the deficiency, expect to factually present the items of deficiency in past Tax Filings, and to correct them. The background as to why the deficiencies occurred is not relevant.
- Where a Taxpayer comes forward with a voluntary disclosure, it must be complete in all material respects failing which it shall be invalid.
A Taxpayer choosing to use the voluntary disclosure process shall make a disclosure which is complete in all material respects, failing which the disclosure shall be invalid. A Taxpayer has the responsibility to be truthful and provide complete information. Thus, if a Taxpayer does not make a complete and truthful disclosure, and it is determined that the disclosure is incomplete, the entire voluntary disclosure shall be disregarded and the Taxpayer may be subject to penalties and prosecution as provided by law.
- Under a voluntary disclosure, a Taxpayer shall be able to make such elections and designations as would have been available and reasonable had the Taxpayer made these on a timely basis but not so as to allow retroactive Tax planning.
A Taxpayer shall be entitled to make such reasonable elections and designations as would have been available had the Taxpayer filed on a timely basis. However, this does not allow retroactive Tax planning, which must be defined according to the circumstances. The Taxpayer may make such elections and designations as would reasonably have been made had the Tax Filings been made on a timely basis containing all of the required information, allowing the Taxpayer to be treated equally with regards to other Taxpayers.
- Under a voluntary disclosure, penalties may be reduced or waived.
Under a voluntary disclosure, penalties for under-reporting of income or claiming of excessive deductions may be mitigated or waived but interest may still be charged on the Tax which is owing.
- Reasonable deadlines may be imposed by the State in respect of a voluntary disclosure such that the process is completed within a reasonable period of time.
A Taxpayer shall proceed forthwith with completing a voluntary disclosure and provide all required information within a reasonable time as may be specified by the State. This follows from a Taxpayer's responsibility to provide information on a timely basis and as when reasonably required. The failure to provide this information and proceed diligently shall render the voluntary disclosure void, and the Taxpayer may be liable to prosecution in the normal course.