Tax clearance certificates are essential documents for individuals and businesses operating in South Africa.
These certificates provide proof that a taxpayer has no outstanding tax liabilities with the South African Revenue Service (SARS).
This article will explain what a tax clearance certificate is, who needs one, who issues it, and how to obtain it.
What is a Tax Clearance Certificate?
A tax clearance certificate is a document that confirms a taxpayer’s compliance with their tax obligations.
This certificate is issued by the South African Revenue Service (SARS) to individuals and businesses who have no outstanding tax liabilities.
The certificate is valid for 12 months and must be renewed annually.
To apply for a tax clearance certificate, taxpayers will need to provide the following documents:
- A copy of their identity document or passport
- Proof of address (not older than three months)
- A tax reference number
- Any outstanding tax returns
- Proof of payment of any outstanding tax debts or liabilities
Who issues Tax Clearance Certificates?
Tax clearance certificates are issued by the South African Revenue Service (SARS).
The certificate confirms that the taxpayer has no outstanding tax liabilities and is tax compliant.
SARS is responsible for the administration of tax in South Africa and issues tax clearance certificates to taxpayers who meet their tax obligations.
Who Needs a Tax Clearance Certificate?
A tax clearance certificate is required by individuals and businesses who need to provide proof that they are tax compliant.
Having a tax clearance certificate can help individuals and businesses establish their credibility and reliability.
It provides evidence that the taxpayer is compliant with their tax obligations and has no outstanding tax debts or liabilities. This can be beneficial when applying for contracts, licenses, permits, and funding.
Some instances where a tax clearance certificate may be required include:
- Tendering for government contracts
- Applying for certain licenses or permits
- Applying for emigration clearance
- Requesting certain types of funding
- Opening a bank account
- Registering as a vendor with the government
How Long Does it Take to Get a Tax Clearance Certificate?
The processing time for a tax clearance certificate can vary depending on the application method and the complexity of the taxpayer’s tax affairs.
If applying online, taxpayers can expect to receive their certificate within 24 to 48 hours. If applying in person, the processing time may take longer, depending on the workload of the SARS branch.
Taxpayers can apply for their tax clearance certificate online through the eFiling system.
To apply online, you must have an active eFiling profile and follow the steps outlined on the SARS website.
Alternatively, taxpayers can visit a SARS branch and complete the application process in person.
If you do not have a tax clearance certificate, you may not be able to conduct certain business transactions, especially those involving government or public sector entities.
Additionally, not having a tax clearance certificate may also limit your ability to secure financing or enter into certain agreements with other businesses.
In some cases, failure to obtain a tax clearance certificate may result in penalties or legal action by tax authorities.