SARS Compliance & eFiling

Maintaining good standing with SARS is essential for business continuity. A tax compliance certificate is required for government contracts, tenders, and increasingly for banking and trade finance. Non-compliance attracts penalties, interest, and ultimately administrative enforcement.

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SARS eFiling

All tax returns, payments, and correspondence are managed via SARS eFiling (efiling.sars.gov.za) or the SARS MobiApp.

eFiling Registration Requirements

• Company registration number (CIPC)
• Tax reference number (issued at company registration or separately via SARS branch)
• Bank account details for refunds
• Representative taxpayer (director or public officer) with valid South African ID

Key eFiling Functions

• Submit ITR14 (company tax return)
• Submit VAT201 (VAT return)
• Submit EMP201 (monthly employer return)
• Submit EMP501 (employer reconciliation)
• Pay all tax obligations via eFiling or eBanking
• Request tax clearance certificates
• View account balance, correspondence, and audit notices
• Lodge objections and appeals

Public Officer

Every company must appoint a Public Officer — typically a director or a designated manager. The public officer is responsible for ensuring all returns are filed and taxes paid. SARS communicates with the public officer. Changing the public officer requires a RAV01 update via eFiling.

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Tax Clearance Certificate (Good Standing)

Required for:

• Government tenders (all tenders above the threshold)
• Foreign investment allowances
• Some banking and trade finance facilities
• Business licensing in certain industries

Issued when: All returns are filed and all tax obligations are paid (or subject to an approved payment arrangement).

Obtain via: eFiling → Tax Compliance Status → Request → Good Standing

The certificate reflects a PIN which third parties can verify online — it does not need to be printed.

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Common SARS Compliance Failures and Penalties

Administrative Non-Compliance Penalty (Admin Penalty)

Fixed monthly penalty for failure to submit returns:

Assessed Loss / Taxable Income	Monthly Penalty
No return submitted (default)	R250/month
Repeat non-compliance	Escalating: up to R16,000/month

Penalties accumulate for every month a return remains outstanding. SARS has automated this — the penalty runs until the return is submitted.

Understatement Penalty

Applied when taxable income is understated:

Behaviour	Penalty Rate
Substantial understatement	25%
Reasonable care not taken	50%
No reasonable grounds	75%
Gross negligence	100%
Intentional tax evasion	150–200%

Late Payment Interest

The prescribed interest rate (linked to the repo rate) is charged on all outstanding amounts from the due date. Currently approximately 11.25% per annum (varies quarterly).

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SARS Audits and Verifications

Verification

A verification is SARS confirming the accuracy of a return. Common triggers:

• VAT refund claims
• First VAT return after registration
• Significant changes in income or deductions year-on-year
• Random selection

Response: SARS issues a letter of engagement via eFiling specifying documents required. Typical turnaround: 21 business days.

Audit

A formal examination of a taxpayer's affairs. More extensive than a verification.

Audit triggers:

• High-risk industry flagged by SARS
• Third-party data mismatch (bank feeds, property deeds, UIF records)
• Whistleblower report
• Assessed loss claimed over multiple consecutive years
• Transfer pricing risk

Best practice:

• Maintain complete records for 5 years from the date of submission
• Keep original tax invoices, bank statements, payroll records, and contracts
• Respond within the prescribed timeframe (non-response is deemed agreement)
• Engage a tax practitioner for substantive audits

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Dispute Resolution

If SARS raises an additional assessment that you disagree with:

Step 1 — Request for Reasons (RFR)

Within 30 business days of the assessment. SARS must provide reasons within 45 business days.

Step 2 — Notice of Objection (NOO)

Within 80 business days of the assessment (or 30 business days after receiving reasons). Lodge via eFiling. Must specify the grounds of objection — vague objections are invalid.

Step 3 — Notice of Appeal (NOA)

If SARS disallows the objection. Filed within 30 business days. Goes to:

• Alternative Dispute Resolution (ADR): Facilitated by a SARS ADR facilitator — recommended first step for most disputes
• Tax Board: For disputes under R1 million — informal, relatively quick
• Tax Court: For larger disputes or where Tax Board decision is appealed

Payment Pending Dispute

Amounts under dispute must generally still be paid (or 50% with a SARS suspension of payment granted). Non-payment while disputing does not halt SARS's collection process.

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Approved Payment Arrangements

When a company cannot pay in full, SARS may approve a deferred payment arrangement:

• Apply via eFiling or at a SARS branch
• Must submit supporting financial statements showing inability to pay
• Arrangement typically runs 12–24 months
• Compliance with all current obligations is required during the arrangement
• Interest continues to accrue on the outstanding balance

A company under an approved payment arrangement can still obtain a tax clearance certificate for good standing purposes, provided it is current with the arrangement.