11 Sep 2013

Tax Compliance - A new Approach

Practice Area(s): Tax |

No longer will taxpayers be able to rest secure in the knowledge that their tax clearance certificate ("TCC") will grant them a blanket tax compliant status for at least a year.  The South African Revenue Service ("SARS") is currently implementing a new process for taxpayers who require confirmation that their tax affairs are in order.  This new process, to be known as the Tax Compliance Status ("TCS") system will require a single online application that will replace all previous forms and cover the various types of TCC's that are applicable.  Manual submissions will only be required for a TCC for emigrants. 

An important feature of the TCS is that it creates a means for SARS to monitor a taxpayer's compliance status on an ongoing basis.  An application through the TCS system will result in SARS issuing a unique access code or "pin" which, when entered into an online portal, will indicate whether a taxpayer has been successful in complying with the necessary requirements for a tax clearance application.  In other words, a taxpayer who applies through the TCS system may, upon receiving the unique pin, verify whether its application has been successful or not and, thereafter, make that pin available to a third party (e.g. a tender board) for tax compliance to be confirmed.

Taxpayers will need to be aware of the fact that the TCS facilitates ongoing tax compliance verification and ensures that, for example, a tax filing requirement does not slip through the cracks.  Therefore, a taxpayer who applies for a tax clearance for tender purposes and receives confirmation that the application was successful, may find that its status has changed at the time when a third party makes use of the pin to verify this fact.  Taxpayers will no longer be able to rely on a TCC that remains in operation for a fixed year period.  Applications through the TCS will also be project specific and need to specify, amongst others, the purpose for the application, the duration of the project, the project value and, the specific tender number (if applicable). 

Although SARS are seeking to keep administrative efficiency and ongoing tax compliance in balance, taxpayers may find that an increased burden has been placed on them.  This will particularly be the case for taxpayers who require a large number of TCC's with varying contract periods and values some of which cannot be easily determined.  To retain their compliance status, taxpayer's will need to ensure that ongoing compliance related issues are fully and timeously complied with, regardless of how insignificant they may seem.