Article PFMA SCM Changes: Electronic Tax Compliance (2014)

On 15 July 2014, National Treasury has issued NT Instruction 3 in terms of S76(4)(a) of the Public Finance Management Act (PFMA) to various accounting officers and accounting authorities of national departments, constitutional institutions, public entities and provision treasuries as listed in Schedule 2 and 3 to the PFMA (PFMA entities).

Following abuse in the supply chain management systems pertaining to tax compliance of those persons conducting business with the State (at the time of submission of bid, the award of bid and during the full duration of their supply chain contracts), the South African Revenue Service (SARS) will be implementing an electronic Tax Compliance Status (TCS) system, to provide PFMA entities to verify and track the compliance status of such persons conducting business with the State through means of online real-time verification.

From 1 November 2014, SARS is to phase out of paper-based tax clearance certificate issued and to replace it with an electronic tax compliance system. From 1 April 2015, SARS is to cease to issue paper-based tax clearance certificates. Ducharme has summarised the NT Instruction, with focus on:

• Electronic Tax Compliance Status system
• Disclosure of information (consent required through Bid documents & information disclosure to SARS by PFMA entities)
• Tax compliance status checks required to be performed
• Non-compliance and challenges that can be raised by bidders, with consideration of re-evaluation by PFMA entity and deviations by NT