Customs

The South African Revenue Service (Sars) on 03 March 2014 announced that it had introduced an enhanced Tax Clearance Certificate (TCC) application process on eFiling and in its branches. According to Sars this is the first step in the phased implementation of a modernised tax compliance process to be introduced in the first quarter of 2014.

What to do? A Sars client simply needs to apply online using Sars improved online system and collect the certificate at the Sars branch. What does an applicant need to do when applying for a TCC on eFiling? A Sars client needs to use the holding company’s (legal entity’s) Income Tax reference number. Ideally the applicant should also use the entity’s Value-added Tax (VAT) and Employees Tax (PAYE) reference numbers. What if it’s for a branch or division of the main company (entity)? If a Sars client uses a: (i) branch VAT reference number, (ii) branch registration number for Payroll taxes, (iii) Pay-As-You-Earn (PAYE), (iv) Skills Development Levy (SDL) or (v) Unemployment Insurance Fund PAYE, then SARS will add all sub-entities belonging to the holding company and provide a consolidated compliance answer.

According to Sars the tax compliance of sub-entities, divisions or branches of a corporate will have an impact on the holding company’s tax compliance status, meaning if any one of 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 indicated that the VAT registration number that appears on the TCC would be the number of the requesting sub-entity. As for the name that will appear on the TCC? The “Trading Name” will not be reflected on the TCC, only the legal names that are on Sars’ records will be reflected. What this means is the legal names in Sars’ records per tax reference number will be pre-populated next to each reference number reflected on the TCC.

In an instance where a Sars client does not agree with the names pre-populated, the client will have to update his/her registered particulars at a Sars branch with relevant supporting documents, eg, Company registration documents as provided by the Companies and Intellectual Property Commission (CIPC).

According to Sars they made this change in an effort to guard against fraud and the misuse of the TCC.