What is tax clearance and why do I need it?

We’ve discussed financial emigration and fund transfers in some length in the past few months, but not everyone understands tax clearance and how it works. Unfortunately, most South Africans get a bitter taste in their mouths when the subject of tax arises, but in most cases if you want to move your money abroad, you will inevitably have to deal with SARS.

What is a Tax Clearance Certificate?

A Tax Clearance Certificate is a document issued by the South African Revenue Service which validates your status as taxpayer and confirms that your tax affairs are in order at the date of issue. This agreement may, in special cases, be issued to applicants who are in tax arrears if an instalment arrangement has been made with SARS.

What is a TCC used for?

The TCC is required for people who;

• Apply for government tenders or advertised bids
• When needed by companies or for other purposes to verify if someone is tax compliant (good standing)
• want to transfer funds out of South Africa using their Foreign Investment Allowance (FIA)
• For emigration purposes

What are the requirements for getting a TCC?

SARS will only issue a TCC if you fulfill the following requirements:

• You must have registered for an Income Tax reference number and this number must be active and correct
• You may not have outstanding tax debt, including Secondary Tax on Companies (STC), Administrative Penalties and Employee Tax
• You are adhering to all deferred arrangements
• Your returns and/or declarations must be up to date or in the process of being assessed by SARS
• The registration details on the TCC01 must correspond with the information in the SARS system (if applicable).

How do I file my application?

Depending on your reason for filing for a TCC, you will need to complete one of the following documents:

• IT 21 (a) – an application for a TCC in respect of a citizen emigrating from South Africa.
• TCC-01 – an application for a TCC in respect of Tenders and Good Standing.
• FIA-001 – an application for a TCC in respect of Foreign Investment Allowance for Individuals.

For those applying for a TCC-01, the TCC is only valid for one year from the date of issue provided that you remain compliant with SARS requirements.

How do I file for a TCC?

You can complete the application for an IT 21 (a) and FIA-001 at your nearest SARS branch or submit it via post to SARS. TCC-01 applications can be completed using e-filing.

Of course, if you’re sitting halfway around the world, filing your TCC could be difficult. For those wishing to emigrate financially or use their FIA, there may be additional documentation to file and institutions like fund administrators and banks to deal with.

Let FinGlobal do the leg work for you

FinGlobal can take on the administrative process for you; dealing with SARS, your insurers, fund administrators and banks. We can also ensure competitive exchange rates on transferring your money to your new country of residence.

We can get your money to you faster than if you undertake the process yourself, ensure that you receive all the refunds due to you and you can rest assured that the entire process is 100% compliant with authorities in South Africa and abroad.

Just leave your details and we’ll call you back!