New tax compliance system welcomed
18 April 2016
Posted by: Author: Amanda Visser
Author: Amanda Visser (BDlive)
A new tax compliance status system that is expected to speed up the process of obtaining tax clearance certificates from the South African Revenue Service (SARS) comes into effect on Monday.
Businesses are required to submit tax clearance certificates when they apply for a government tender, to confirm that the business or person is in good standing. Individual tax payers need the certificate to show that they are tax compliant when they emigrate from South Africa.
The current process has been plagued by frustration and delays. Obtaining a tax clearance certificate can make or break a company that requires the document to win a tender to continue trading.
PwC said there have been many instances when the information obtained from SARS was inaccurate when taxpayers applied for clearance certificates.
Taxpayers will have to be registered for the electronic filing system (eFiling) and have at least one "tax product" such as Income Tax, or Pay-As-You-Earn activated.
The new system will allow taxpayers to obtain a unique pin which can be used by third parties such as government (for tenders) or the Reserve Bank (for the foreign investment allowance) to verify the taxpayer’s compliance status.
They will also be able to print a tax clearance certificate through the eFiling system, eliminating the need to visit a SARS branch.
The introduction of the new system "underpins the replacement of the current tax clearance certificate system", SARS said in its explanatory documentation.
According to PwC the benefits of the new system include the fact that outstanding issues or queries can be resolved electronically rather than having to visit a SARS branch office.
"Taxpayers can monitor their tax compliance status on a more frequent basis, and not end up with surprises when a tax clearance is required, therefore ensuring and promoting better and improved tax compliance," said PwC.
Chérie Carstens, tax technical team leader at the South African Institute of Tax Professionals, says it is a noticeably better system.
"A compliance status is provided in real-time as opposed to the old system where a tax clearance certificate would be valid for a year, in which time a taxpayer could become non-compliant."
She said the new system also allows one to challenge a status online – if SARS says a taxpayer is non-compliant he can "argue" it and provide proof.
A new feature is the unique pin which will be issued for each tax compliance status request. This can be done through eFiling or at a branch.
Ms Carstens said it is also a better system to combat fraud. Paper clearance certificates are easy to manipulate (copying and distributing illegally). Fraudsters are less likely to get away with this electronic pin numbers linked to the taxpayer.
"It is great that taxpayers and practitioners no longer need to visit a SARS branch and queue for hours. This will free up the branch offices for more urgent issues," said Ms Carstens.
The taxpayer can view his compliance profile which will indicate whether he is compliant (green colour-coded profile) or non-compliant (red colour-coded profile)
According to SARS, taxpayers who are not satisfied or do not agree with the tax compliance status can request SARS to re-evaluate it. This can also be done through eFiling.
Mazars tax consultant Sharon Machutchon said if the taxpayer obtains a green light, they are able to access their tax clearance certificate immediately.
"Where the taxpayer does not obtain a green light the taxpayer is able to rectify the issue relating to the non-compliance electronically within a short period of time. This eliminates the taxpayer having to go into SARS to enquire about the non-compliance."
PwC said limited options will initially be available to taxpayers to rectify their compliance status. Current online remedies include submission of outstanding returns, payment of outstanding amounts, correction of accounts and challenging a compliance status.
Ms Machutchon also believes the new system will be more efficient when an urgent tax clearance certificate is required by a taxpayer.
"The taxpayer can obtain a clearance certificate within minutes online, whereas before, the taxpayer would need to physically collect the certificate from a SARS branch office, which logistically can be very onerous," she said.
She said that supporting documentation, if required by SARS, can be uploaded electronically in the new system. This is significant time saver because such documentation would need to be submitted to a SARS branch office.
The taxpayer will be able to control the useful life of the security pin which can be valid for one to 12 months.
The taxpayer can also cancel a security pin should it be provided to a third party and the taxpayer does not want the third party to access the compliance status after a particular date, she said.
This article first appeared on bdlive.co.za.