Currently, section 256 of the Tax Administration Act, No 28 of 2011 (TAA) houses the provisions governing the application for and granting of Tax Clearance Certificates (TCC). It is commonplace for taxpayers to require a TCC for a number of reasons including tenders, good standing, foreign investment allowance and emigration. The amendments to section 256 propose to remove the granting of a TCC and instead provide the taxpayer with a “confirmation of the taxpayer’s tax compliance status”.
The section, as it currently stands, sets out clear circumstances in which a TCC would not be issued to a taxpayer, namely an outstanding tax debt or an outstanding return. The proposed amendments seek to insert an additional reason for the refusal to confirm a taxpayer’s status as “compliant”. A taxpayer will only be confirmed as compliant if, in addition to there being no outstanding tax debt or return, there is no “outstanding request from SARS to provide relevant material if, in the opinion of the SARS official, there is no just cause for delay.” This is somewhat concerning, given the potentially protracted nature of the dispute that can arise pursuant to SARS requesting information the taxpayer does not feel is relevant to the query at hand. A taxpayer may be forced to provide information that it may otherwise not be obliged to, in order to minimise the economic loss that will result from not being able to move funds or apply for tenders. The proposed change is effective from the date of promulgation of the DTALAB, which has yet to be announced. It is not clear whether this requirement will apply to requests for relevant material made before the promulgation of the DTALAB, but not yet complied with, or if it will only apply to requests for relevant material made after the enactment of the Act.
Conceptually the confirmation of a taxpayer’s compliance status is far broader than a pure TCC, indicating a possible move towards providing SARS with more discretion in such matters.
- Webber Wentzel
- South Africa