Tax clearance certificates
Posted by: Author: Aucamp Scholtz Lubbe
Author: Aucamp Scholtz Lubbe
A tax clearance certificate (TCC) is a document issued by SARS confirming that the applicant’s tax affairs are in order.
TCCs are required for tender applications, to reflect "good standing”, for foreign investment, and for emigration purposes.
The Tax Administration Act, which came into effect on 1 October 2012, contains requirements and time frames for the issue of tax clearance certificates. SARS has also issued guidelines in this regard.
TCCs pertaining to tenders and "good standing” are of particular importance for many of our clients since these TCCs are often required by businesses in order to bid for a tender or render a particular service. Following is a brief overview of the application process and requirements relating to these two types of TCC.
In any application for a TCC, for whatever purpose, the reason for the application must be properly stated. The TCC is only valid for one year from the date of issue, provided the taxpayer remains compliant with SARS requirements. The proviso confirms that SARS is entitled to withdraw a TCC at any time if it was issued in error or if it was obtained on the basis of fraud, misrepresentation
or non-disclosure of material facts.
SARS requires certain conditions to be met before a TCC is issued. These conditions are that:
- the taxpayer must have registered for income tax prior to applying for a TCC;
- the taxpayer should have no outstanding debt for any taxes (including income tax, Value Added Tax (VAT), dividend tax, administrative penalties and employees’ tax);
- any deferred arrangements made are being adhered to;
- all returns and/or declarations are up to date and in the process of being assessed by SARS;
- all tax reference numbers must be active and correct, e.g. the tax reference number must not be deregistered or suspended on the SARS system; and
- the registration details on the application form (TCC-001) must correspond with the information on the SARS system.
It is important to bear in mind that SARS has 21 business days following the submission of an application to issue or decline a TCC and that, to be on the safe side if one is in a hurry, the full period should be allowed for. It goes without saying that, to avoid an application being declined, one should be 100% sure that one’s tax affairs are indeed in order before applying for a TCC.