The South African Revenue Service (SARS) has introduced an enhanced Tax Clearance Certificate (TCC) application process available through eFiling and at SARS offices, as part of a series of initiatives to modernize tax compliance due to be rolled out during the first quarter of 2014. As the TCC validates the compliance status of a taxpayer it is issued free of charge for one year, and may be required when a business applies for a government tender or bid, to receive a foreign investment allowance, or when emigrating.

A certificate will only be issued by SARS where the taxpayer has no outstanding debt for all taxes, including administrative penalties and employees’ tax, and is adhering to any deferred arrangements, has up-to-date tax returns and declarations, and has active and correct tax reference numbers.

A taxpayer can now simply apply online for a TCC using SARS’s improved online system, and collect the certificate at the branch. When making its application, the legal entity’s income tax reference number needs to be furnished, and, depending on their status, also the entity’s value-added tax and employees’ tax reference numbers.

SARS will also add all sub-entities belonging to a holding company and provide a consolidated compliance answer. However, the tax compliance of sub-entities, divisions, or branches of a corporate entity will have an impact on the holding company’s tax compliance status, meaning that if any one of the holding company’s sub-entities is non-compliant the holding company will also be regarded as non-compliant, and a TCC will not be issued. SARS confirmed that it has made the changes in the TCC process as part of its efforts to guard against fraud and the misuse of the TCC.