Why do you Need Tax Clearance?
Ever wondered what’s the big deal with getting a tax clearance certificate?
Firstly, talking about tax in South Africa is the last thing that should be boasted whatsoever, but since we’re on the topic, it’s quite important to understand just exactly how tax clearance works.
Why do you need a tax clearance certificate, to begin with?
Well, you can’t move your money outside of the country without it, which means if you want to travel abroad, or perhaps even move to another country, you’ll have to have one on hand. The only way to obtain the certificate, however, is to visit SARS, which is yet another subject South African residents’ dread talking about. Not to even talk about the service thereof, but that’s a topic that should be left for yet another day.
What exactly is a tax clearance certificate?
It is a document that is issued by SARS (the South African Revenue Service), which validates one’s status as a taxpayer, as well as confirms that one’s tax affairs are always in order and remain up to date.
The certificate itself is like an agreement, that is issued as an agreement, to individuals, whose tax is in arrears, if an installment arrangement is made with SARS.
When applying for a tax clearance certificate, SARS might issue you a TCC, which is required for individuals who apply for tenders/ advertised bids from the government, for emigration purposes, for those who want to transfer money outside of the country via Foreign Investment Allowance or need to verify whether the individual is tax compliant.
The requirements of obtaining a TCC
SARS will issue a TCC if, and only if, you meet the following requirements:
- You do not have any outstanding debt, tax or administrative penalties.
- You adhere to all your deferred arrangements.
- You have a registered tax reference number, which is active on their systems and correct.
- Any returns and declarations are up to date, or in process of being assessed by them.
- Your registration details must also correspond with information in the system of SARS.