New systems in place for SARS tax compliance – what you need to know

 ·4 May 2023

The South African Revenue Service (SARS) has updated its method of acquiring Tax Compliance Status (TCS).

According to the taxman, it enhanced its TCS system on 24 April following consultations with stakeholders and the South African Reserve Bank (SARB).

Having TCS allows taxpayers to authorise any third party to verify their compliance status through electronic access.

SARS’ previous TCS solution had been operational since April 2016 and encountered the need to be rationalised and sped up in line with international standards.

In addition, following the announcement of the abolition of emigration as an exchange control concept in 2020, the SARB has removed the requirement to apply to emigrate financially.

SARS said that this necessitated changes to its process and forms. The development is part of the authority’s strategic intent of voluntary compliance and modernisation.

The enhanced TCS system supports the strategic objectives of SARS to make it easier for taxpayers to comply, said SARS.

“It also entrenches TCS verifications in Government, private sector, and individual taxpayer space, either voluntarily or via legislation. Whilst for compliant taxpayers, this makes it easy, it will be harder for taxpayers who are unwilling to comply.”

“The enhanced TCS system also aims to dramatically improve turnaround times for taxpayers and traders that are compliant,” said SARS.

There are now also updated steps to apply for TCS as it relates to foreign allowances requested through the Approval for International Transfer (AIT) Applications, including the submission of the following documents:

  • Relevant material showing the source of the capital to be invested.
  • A statement of assets and liabilities for the preceding three tax years, which includes the disclosure of all investments, loan accounts, and distributions from local and foreign companies, trusts, etc.
  • If the TCS application is submitted by someone other than the taxpayer, the relevant Power of Attorney must be submitted.

The full guide can be accessed here:

SARS said the additional information requested on the AIT application allows it to ensure that all required tax payable has been accounted for and, if required, address any non-compliance that is detected through verification and/or an audit.

According to the revenue service, no TCS status is required for yearly transfers up to R1 million.

“SARS is of the view that taxpayers applying for more than the yearly R1 million single discretionary allowance are sophisticated taxpayers who should reasonably have records of the cost price of major assets they own.”

“This includes their local and foreign fixed properties, listed/unlisted investments, crypto assets and cash in bank to name a few. If the taxpayer does not own a particular type of asset, that should be captured as zero on the asset and liability part of the application form.”

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