Credibility and compliance are very important if you want to make a successful name in the world of business. Therefore, the SARS tax clearance certificate is crucial for small and large enterprises and entrepreneurs. This certificate acts as proof that the taxpayer’s affairs are in order and shows their commitment to responsible taxation.
For a business organization in South Africa SARS tax clearance certificate is paramount because it provides tax information during new contracts, tenders, and investments. So, let me explain in detail the importance of the SARS tax clearance certificate and how to apply for this certificate.
SARS Tax Clearance Certificate
There is no doubt about the significance of tax clearance certificates from the South African Revenue Service (SARS) for businesses. Furthermore, it helps in confirming that they have paid the necessary tax and are regular taxpayers.
Why is SARS Tax Clearance Certificate Important?
It is established that this document is necessary for enterprises and entrepreneurs during their legal procedures. However, it is also important to create new business opportunities for them because having a tax certificate will prove your responsibility. Likewise, it increases your credibility when bidding for tenders, applying for contracts, looking for partnerships, etc.
A SARS tax clearance certificate of good standing indicates that you have no outstanding tax debts and have resolved compliance issues. Your organization or your being in good standing with SARS is good for building trust with suppliers and customers. Furthermore, if you are planning on looking for foreign investment, a tax clearance certificate is a requirement for easy cross-country transactions.
Additionally, if you are trying to migrate from South Africa, you must show a tax clearance certificate as a part of the emigration process. Similarly, it will give you access to government tenders or contracts.
Tax Clearance Certificate as a Requirement
The bidder must keep their taxes in order; you must have the tax clearance certificate or some arrangements with SARS to fulfill the tax obligation. Furthermore, if you want to bid, you must attach and submit the original tax clearance certificate with it because its copy is not accepted and might invalidate the bid. If more than one party is involved in the bidding, each will present and submit its separate tax clearance certificate.
How to Apply for SARS Tax Clearance Certificate?
You can apply for a SARS tax clearance certificate in two different ways. First, download the application for a tax clearance certificate from www.sars.gov.za. Furthermore, choose any of the following methods according to your needs.
Suppose you need the tax clearance certificate for foreign investment or emigration purposes. In that case, you will need to download the form, fill it in with the necessary details and submit it in person at a SARS branch along with your documents. Please note that you must visit the branch physically. However, if you do not want it for the abovementioned purpose, you can mail it or drop it in the SARS drop-box.
Additionally, if you want to acquire SARS tax clearance certificates for tenders or good standing certificates, you can apply online through eFiling. Furthermore, click the link above and navigate to the eFiling features to proceed with your application.
SARS Tax Clearance Certificate Declined Reasons
If you are wondering why SARS declined your tax clearance certificate, here are some common reasons SARS rejects issuing a tax clearance certificate. However, please note that these are general reasons and might not be specific to your situation.
SARS will decline the tax clearance certificate;
- If the applicant has not paid the taxes completely and currently has unpaid taxes, administrative penalties, or employee tax exceeding R1000 and has not made any payment arrangements with SARS.
- If the applicant previously made payment arrangements with SARS for income tax, VAT, PAYE, SDL, or UIF but could not stick to it.
- If all the applicant’s tax returns are not cleared and have made no arrangements with SARS to clear them.
- The applicants are not registered with an income tax reference number, so they will not be eligible for the tax clearance certificate.
- If the applicant status is inactive or they are not registered with SARS.
How Long is a Tax Clearance Certificate of Good Standing Valid?
A letter of good standing from SARS is valid for only one year. All income tax returns must be filed annually, so they remain valid for only one financial year. Furthermore, suppose you have any outstanding annual tax returns. In that case, the certificate will lose its validity, and anyone can check online and will find out the invalidity of your tax clearance certificate.
Therefore, if you wish to keep your certificate valid, you must promptly submit your annual tax returns to SARS. Otherwise, it will be discarded.
Can I Download My SARS Tax Clearance Certificate?
SARS had the ‘download and print’ feature till October 2019 but discarded it for a better and enhanced Tax Compliance Status System. The Tax Clearance Certificate users will now have to use their TCS PIN to share their tax compliance electronically with others instead of the TCC. Furthermore, when a TCS PIN is sent to the other party, it allows them to view the taxpayer’s tax compliance status online through eFiling.
When you share your TCS PIN with others, they will be able to see your overall tax compliance status. However, they will only view your tax compliance status, and other information will be kept private from them to protect your confidentiality. So, this method is easier and more innovative than the SARS tax clearance certificate.
What is TCC in South Africa?
TCC in South Africa stands for Tax Clearance Certificate. Moreover, it is a document issued by South African Revenue Services (SARS) as a letter of good standing to confirm that your tax affairs are in order. Furthermore, it would be best to have it for tender application, bidding, and emigration purposes.
In short, the SARS clearance certificate empowers enterprises and entrepreneurs by giving them solid proof of their responsibility and commitment toward taxation. Furthermore, you can apply for TCC online through eFiling or by visiting the SARS branch. However, TCC is no longer available; tax compliance status or TCS PIN is used to show the taxpayer’s tax clearance electronically.