So, you’ve probably heard people talking about getting a “South African tax clearance certificate.” Well, here’s a bit of a surprise: the South African Revenue Service (SARS) no longer issues those! The revenue authority switched to a digital system called the Tax Compliance Status (TCS) in 2015. Instead of a paper certificate, you now have a TCS PIN. Think of it as a digital stamp that says, “Hey, this person (or business) is all good with their taxes.” When you must prove your tax compliance, just share this PIN.
Do you still need to catch up on the tax clearance certificates business in South Africa? No worries! We have a simple guide explaining everything you need to know about the SARS tax clearance system.
What is the Tax Compliance Status (TCS) System?
In South Africa, SARS has modernised its tax compliance system. The Tax Compliance Status system is a streamlined, digital approach designed to make tax compliance more efficient for taxpayers. It’s simple and user-friendly, making it easier for you to manage your tax affairs.
Some of the changes intended to make it easier to get tax clearance from SARS:
- Unified application: Previously, separate applications were required for tax clearance in different scenarios, such as Foreign Investment Allowance (FIA) and emigration. Now, a single “Approval International Transfer” application covers these and other related transactions.
- Simplified verification: The “Good Standing” TCS PIN option is used by third parties to verify general tax compliance, simplifying the process for both taxpayers and those requesting verification.
How does the TCS system work?
Instead of a physical tax clearance certificate from SARS, you now get a digital code called a TCS PIN. Think of it as a key that lets others check your tax status securely online. When someone needs to verify your tax compliance, they use this TCS PIN to look up your information on the eFiling system.
What is a TCS PIN? It’s essentially a digital stamp allowing you to authorise third parties (like businesses or government entities) to check if your taxes are up-to-date through the eFiling system.
- The PIN provides a snapshot of your tax compliance status during verification, ensuring that the information is always up-to-date and accurate. This real-time verification feature gives you and the verifying party confidence in the validity of the information.
- Rest assured, only your compliance status is visible to third parties, ensuring the confidentiality of your tax information. This feature of the TCS system protects your privacy while still allowing you to prove your tax compliance.
- Authorisation: You need to share your PIN with the authorised party.
Using a TCS PIN, you can easily prove your tax compliance without providing physical tax clearance certificate documents. Remember, your tax status can change, so it’s always up-to-date based on your latest tax filings.
Read more: Steps to take if your SARS tax compliance status shows as “non-compliant.
How does the SARS TCS System work in South Africa?
The SARS TCS system offers two primary tax compliance applications:
1. Good Standing:
- Purpose: This application verifies a taxpayer’s overall tax compliance status. It confirms that the taxpayer is up-to-date with all their tax obligations, including income tax, corporate tax, VAT, and other relevant taxes.
- Usage: Third parties, such as banks, landlords, or businesses, typically require this application to assess a person’s or entity’s financial reliability.
2. Approval International Transfer:
- Purpose: This application is used by South African residents transferring funds abroad or individuals ceasing their residency in South Africa. It ensures that the transfer complies with South African tax laws and regulations.
- Usage: This application is necessary to obtain approvals and documentation for international transfers, such as emigration tax clearance or foreign investment allowances.
Both applications provide a clear and concise overview of tax compliance status, ensuring individuals can conduct financial transactions smoothly and legally.
Read more: SARS AIT: What to expect when transferring proceeds from South Africa.
How to avoid headaches when applying for tax clearance
One of the easiest ways to avoid undue delays when seeking tax clearance is to ensure you are tax-compliant. To stay on top of your taxes, make sure you:
- File all your tax returns: Don’t miss any deadlines!
- Pay your tax bill: If you owe SARS money, ensure you’re on track with payments or have a plan.
- Register for all the correct taxes: Are you registered for income tax, VAT, or any other taxes that apply to you?
- Keep your information up-to-date: Ensure SARS has your correct address, contact details, and other relevant information.
If you have emigrated from South Africa, it’s important to note that before applying for a TCS PIN, you must have completed tax emigration. Suppose you intend to transfer money out of South Africa. In that case, you will need the Non-Resident Confirmation Letter from SARS that signals that you have successfully transitioned to a non-resident for tax purposes.
Read more: Clearing the confusion – a handy guide to obtaining your SARS tax clearance.
FinGlobal: tax compliance specialists for South Africans
Dealing with SARS on your own can be overwhelming and intimidating. That’s where FinGlobal comes in. Our team of cross-border tax experts is here to guide you through every step, from expat tax compliance to securing tax refunds, handling international transfers, or completing your tax emigration.
Let FinGlobal take the stress out of your tax journey. Simply fill out the form below, and we’ll reach out to discuss your unique needs.
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