Practical accounting insight: South African SMEs often check their tax affairs only when a tender, funder or customer requests proof of good standing. SARS’s Tax Compliance Status (TCS) functionality provides a more useful approach: monitor compliance continuously and resolve issues before they delay an opportunity.
A TCS reflects whether a taxpayer’s registered tax obligations are in order at the time of verification. SARS’s current guidance identifies three core areas on the My Compliance Profile: registration status, submission of returns and outstanding debt. Businesses can inspect these indicators through eFiling and address issues before requesting a TCS PIN. SARS explains the TCS functionality and compliance profile here.
Why TCS matters to growing businesses
A company may need to demonstrate tax compliance when applying for a tender, seeking finance, onboarding with a larger customer or responding to a procurement requirement. SARS’s SMME guidance notes that a valid TCS can help small businesses access contracts, funding and other commercial opportunities. The SARS SMME guidance also highlights the importance of accurate records and timely submissions.
The practical point is that compliance status is not only a tax administration matter. It can affect the speed at which a business is able to pursue revenue, financing and supplier opportunities.
What businesses should check
Before requesting or sharing a TCS PIN, the business should review:
- whether all required tax types, such as income tax, VAT or PAYE, are correctly registered and active;
- whether any returns are outstanding after their due dates;
- whether SARS reflects an unpaid debt for which no approved payment arrangement is in place;
- whether the correct company and tax reference numbers are linked to the eFiling profile; and
- whether the organisation’s eFiling users have the correct access rights.
SARS states that businesses with multiple tax types should ensure their entities and reference numbers are correctly merged so that the compliance profile reflects the full tax position. An incomplete profile can create avoidable delays when a TCS request is made.
Use the PIN carefully
A TCS PIN authorises a specified third party to verify the taxpayer’s current compliance status. It does not provide the third party with unrestricted access to the company’s broader tax information. SARS advises that the third party must use the taxpayer’s reference number and PIN through the approved verification process. The result reflects the status at the time of verification, so businesses should not assume that an old verification remains current. See SARS’s verification guidance.
Practical next steps for SMEs
- Add a TCS review to the monthly or quarterly finance checklist.
- Reconcile SARS statements against the accounting records and investigate unexplained balances.
- Confirm that VAT, PAYE and income tax returns have been submitted and paid where required.
- Keep evidence of payment arrangements, disputes and supporting correspondence.
- Request a TCS PIN only when it is needed and record who received it and why.
Maintaining TCS readiness can turn a reactive compliance exercise into a routine financial control. Businesses that need help reviewing their tax administration and accounting records can explore YFP’s accounting, tax and advisory services.
