Moving abroad doesn’t always mean you’re free from South African tax obligations. If you’re a South African tax resident, you must stay compliant with the South African Revenue Service (SARS), even living elsewhere. If you’ve recently emigrated, you must maintain tax compliance until you can undertake tax emigration from South Africa. The good news? SARS is constantly working to improve the Tax Compliance Status (TCS) system to streamline the verification process for taxpayers. What do you need to know about the SARS TCS system? Let’s take a closer look.

What is the SARS Tax Compliance Status (TCS) system?

Tax Compliance Status (TCS) is a digital system that allows taxpayers to verify their tax compliance status online. This new system replaced the previous paper-based tax clearance system in South Africa, which was outdated and problematic.

Your tax compliance status is not static and can change based on your ongoing tax behaviour. As such, the TCS system provides a real-time view of your compliance status, making it easier for third parties to verify your tax affairs. In contrast, the paper-based tax clearance certificate only showed compliance on the issue date.

What is the tax compliance status meaning? A green status indicates that your tax affairs are in order, while a red status indicates outstanding issues.

Read more: Steps to take if your SARS tax compliance status shows as “non compliant”

Here’s how the SARS TCS system works:

1. Step 1: Requesting your tax compliance status: You can request a TCS PIN via eFiling or the SARS online query system (SOQS).
2. Step 2: Receiving a TCS PIN: Once your request is approved, you will receive a security PIN.
3. Step 3: Authorising third parties: You can share this PIN with authorised third parties (like banks, employers, or government entities) to allow them to verify your tax compliance status online.
4. Step 4: Viewing/verifying tax compliance status: Third parties can use the PIN to view your current tax compliance status on the SARS eFiling system.

When do you need to verify your Tax Compliance Status?

You may need to verify your Tax Compliance Status (TCS) for various reasons, often when dealing with third parties. Here are some of the most common scenarios:

If you have dealings with the government and the public sector:

• Tender applications: Many government tenders require proof of tax compliance as a condition of participation.
• Government contracts: Similar to tenders, government contracts often require tax compliance status verification.

If you need the services of South African financial institutions:

• Foreign Investment Allowance (FIA): To utilise your FIA, you need to provide proof of tax compliance status.
• Loan applications: Banks and other financial institutions may require a TCS to assess your creditworthiness.
• Opening bank accounts: Some banks may ask for a TCS, especially corporate accounts.

If you need to take care of business:

• Business partnerships: Potential partners may request a TCS to ensure you’re financially sound and compliant.
• Mergers and Acquisitions: During M&A deals, a TCS is a vital part of due diligence.

If you’re an expat living overseas:

• Emigration: Proof of tax compliance may be required when emigrating from South Africa to have your tax status changed to non-resident.
• Property transactions: A TCS may be requested when buying or selling property, especially in commercial deals.

As such, the SARS TCS system caters to two main tax clearance applications for taxpayers:

1. Good Standing: This verifies overall tax compliance.
2. Approval International Transfer (AIT): This is for residents transferring funds abroad and those who have ceased residency.

Read more: SARS AIT: What to expect when transferring proceeds from South Africa.

How to activate your Tax Compliance Status:

You’ll need to follow these steps to activate your TCS for the first time:

1. Login to eFiling: Access your SARS eFiling account using your login credentials. If you’re not registered, create an account on the SARS website.
2. Activate TCS Service: Once logged in, navigate to the “Tax Status” section and select “Tax Compliance Status Verification.” Follow the on-screen instructions to complete the activation process.
3. Request a TCS PIN: After activation, you can then request a TCS PIN through eFiling or the SARS online query system.
4. Share the PIN: Once you receive the PIN, you can share it with authorised third parties to verify your tax compliance status.

How to verify Tax Compliance Status as a third party

To verify a taxpayer’s Tax Compliance Status (TCS), you can follow these steps:

1. Obtain the taxpayer’s TCS PIN:

• The taxpayer must request a PIN through SARS eFiling or the SARS online query system.
• The taxpayer will then share this PIN with you.

2. Access SARS eFiling: Log in to your SARS eFiling account. Ensure you have the necessary user rights to perform TCS verifications.

3. Initiate a Tax Compliance Status verification request:

• Navigate to the “Tax Status” section.
• Select “Tax Compliance Status Verification.”
• Enter the taxpayer’s Tax Reference Number (TRN) and the provided TCS PIN.

4. Review the compliance status: SARS will display the taxpayer’s current compliance status, which will be colour-coded –

• Green: Tax affairs are in order.
• Red: Tax affairs are not in order.

5. Print or save the verification: You can print it for your records or save it electronically.

By following these steps, you can efficiently verify the tax compliance status of individuals or businesses.

Read more: Common pitfalls and delays – how to avoid headaches when applying for SARS tax clearance.

FinGlobal: your cross-border tax compliance specialists

Moving abroad and managing cross-border finances can be a headache, especially regarding South African taxes. But don’t worry; FinGlobal is here to simplify your process! Our team of tax experts can help you with:

• Expat tax compliance: Ensure you meet your South African tax obligations while living overseas.
• Tax refunds: Maximise your tax returns and claim any eligible refunds.
• Approved International Transfers: Seamlessly transfer funds abroad while adhering to South African tax laws.

Why choose FinGlobal? We’re committed to making your tax compliance journey as smooth as possible. By handling the complexities on your behalf, we give you peace of mind worth paying for.

Ready to get started? Simply fill out the form below, and we’ll connect with you to discuss your specific tax needs.