How the new Tax Compliance Status (TCS) (the replacement of Tax Clearance Certificates (TCC)) works.
This article will first explain the rational for the new system, then the difference with the previous system and finally on a practical note provide you with steps to obtain your tax compliance status on e-filing.
The new Tax Compliance Status system will be managed online via e-filing.
SARS has decided on the new Tax Compliance system for the following reasons:
Less printing: over ten million tax certificates were printed per annum. According to (see * below for source) one pine tree produces 80 500 sheets of paper. Thus SARS were printing 124 trees worth of tax certificates per year!
Less branch visits: over two million SARS branch visits were done per year for tax certificates.
More tax compliance: change from point in time to continuous compliance. I will elaborate on this point below.
Point in time compliance vs continuous compliance:
As you are probably aware in the past a taxpayer would apply for a tax certificate which will then be either granted or denied based on the taxpayer’s status at the specific time of the application. This is what is referred to as point in time compliance. The taxpayer’s tax certificate approval was fully based on the fact whether all the taxpayer’s tax affairs were in other at that given point in time.
As you are also probably aware many taxpayer’s only scrambled to get their tax affairs in order when they required a renewed tax certificate. This resulted in taxes only being put into order once a year and that is if a tax certificate was required. SARS did not like this.
Thus SARS have now introduced a continuous compliance system. Same as before if the taxpayer applies for a tax certificate, the taxpayer will only be granted one if the taxpayer’s affairs are in order at the time of application. However, the major difference now is that a pin will be issued to the taxpayer that should be provided to third parties (the parties requesting the tax certificate). The third parties can now at any time go online and check the taxpayer’s tax compliance status with the provided pin. If the third party checks the status today and all the the taxpayer’s affairs are in order it will show that the taxpayer is compliant. If the third party checks the taxpayer’s status tomorrow and the taxpayer’s affairs are not in order it will show non-compliant. Thus the pin provides a continuous status of the taxpayer’s compliance status and no longer a point in time view. A tax clearance certificate use to provide the third party with assurance for 12 months that the relevant taxpayer’s affairs were in order for that period. The pin now provides day to day continuous assurance.
If the taxpayer is compliant at a specific point in time the taxpayer can still obtain a tax certificate and print it out. This certificate informs the third party that the taxpayer was compliant at the point in time the certificate was granted, however the tax certificate states:
This certificate is valid until the expiry date reflected above, subject to the taxpayer's continued tax compliance. To verify the validity of this certificate, contact SARS through any of the following channels:
- via eFiling
- by calling the SARS Contact Centre
- at your nearest SARS branch
It is thus clear that going forward to conduct business with third parties that require the taxpayer to be tax compliant, the taxpayer will have to make sure they are compliant at all times.
Next I will provide you with the steps to obtain your tax compliance status on e-filing (see ** below for source):
Step 1: Logon to eFiling
Logon to eFiling by using your login name and password. If you are not yet an eFiler, register on www.sarsefiling.co.za.
You need to be registered for eFiling and have one tax product [such as Income Tax, Value- Added Tax (VAT) or Pay-As-You-Earn (PAYE)] already activated on your taxpayer profile in order to activate the Tax Compliance Status (TCS) service.
Step 2: Activate the Tax Compliance Status service
Tax practitioners and eFiling administrators for organisations must ensure that the correct rights are allocated to users who need access to the tax compliance status screen. For more information on allocating these rights, please refer to the “Guide to the Tax Compliance Status Functionality on eFiling” available on the SARS website www.sars.gov.za.
You only need to activate your Tax Compliance Status once and it will remain active. Once you have activated it and you have merged or declared all your registered tax reference numbers, you will be given access to your My Compliance Profile (MCP).
Step 3: View your My Compliance Profile
You can view your tax compliance profile by selecting the My Compliance Profile menu option. A colour-coded profile will appear to indicate whether you are tax compliant or not.
Red – Your tax affairs are not in order and you are not tax compliant
Green – Your tax affairs are in order and you are tax compliant.
Step 4: Request your Tax Compliance Status via eFiling
Select the Tax Compliance Status Request option and the type of TCS for which you would like to apply. You will have the following options:
- Good standing
- FIA (individuals only) Emigration (individuals only)
Complete the Tax Compliance Status Request and submit it to SARS.
Once your request is approved by SARS, you will be issued with an overall tax compliance status and a PIN. The PIN provides you with a way to authorise any third party to view your tax compliance status online via eFiling. You can request that the PIN be sent to you via SMS and you can view it on your “Tax Compliance Status Request” dashboard on your eFiling profile.
IMPORTANT: A unique PIN will be issued for each request that you make.
In addition to the PIN, you will also be able to print a Tax Clearance Certificate (TCC), in the existing format, via your own computer by selecting “Print TCC”. The “Print TCC” function will only be available if your overall tax compliance status reflects as compliant.
Once you have provided the PIN to a third party, the PIN will enable the relevant organisation or government department to view your current tax compliance status online. It will present them with your overall compliance status as at the date and time they check it and not your status as it was at the date that the PIN was issued to you. To protect the confidentiality of taxpayer information, no other information will be accessible.
Author: Chris Herbst
Contact us: https://www.chconsulting.co.za/contact