If you’re a South African living abroad, your tax responsibilities back home don’t have to be overwhelming, but they will start to feel that way if you ignore the matter for too long. As a South African, your tax obligations don’t cease to exist simply because you’ve gone somewhere else in the world. Sure, the idea of dealing with the South African Revenue Service (SARS) can feel overwhelming, but (as the saying goes) there’s only one way to eat an elephant, and that’s one bite at a time. So take a deep breath, grab a cuppa while we give you some advice and tips to help you get sorted with a tax clearance certificate from SARS.
What is a tax clearance certificate?
A tax clearance certificate is an official document that is issued by the South African Revenue Service that serves as confirmation that the applicant’s tax affairs are in order. What would you need it for? If you’re applying for a South African government tender, one of the requirements is a tax clearance certificate to reflect good standing. You’ll also need a tax clearance certificate if you’re transferring any funds abroad in terms of your foreign investment allowance, or you’re considering emigration. That’s right. Emigration doesn’t mean packing your belongings and leaving the taxman behind.
This document also serves as validation of your status as taxpayer and is proof that your tax affairs are squared up, at the date of issue. If, however, you happen to be in tax arrears (that’s what happens when you ignore your tax responsibilities!) it is still possible for SARS to issue this clearance if you’ve made an instalment arrangement to pay off money owing.
Get your SARS Tax Clearance Certificate Sorted, Easily
South Africa has a residence-based tax system, which means that save for a few exclusions, persons who are ‘ tax resident’ of South Africa are taxed on their worldwide income, while ‘non tax-residents’ are taxed only on their income that is sourced within the Republic.The situation gets even more complicated with the pending “expat tax” amendments, that will see South Africans living abroad taxed on up to 45% of worldwide income, if it exceeds the amount of R1 million per annum.
How do I get a tax clearance certificate from SARS?
It starts with knowing what type of tax clearance you’re applying for. There are three kinds.
- Tax clearance for good standing: Used to apply for South African government tenders and get tax compliance confirmation, usually for the purpose of doing business with another company. (Can take up to 5 working days.)
- Tax clearance for foreign investment allowance purposes: Used to apply for foreign investment allowances available to South Africans abroad, without financial emigration. (Can take up to 21 working days.)
- Tax clearance for emigration purposes: Used by South Africans who have been living abroad prior to financial emigration to provide proof of tax compliance when processing financial emigration. (Can take up to 21 working days)
Some important things to note about your tax clearance certificate application
- In any application, the reason for the application must be properly stated and the tax clearance certificate issued is only valid for one year from the date of issue, provided you remain compliant with SARS requirements in this period.
- SARS can withdraw a tax clearance certificate at any time if it was issued in error, or if it was obtained as a result of fraud, misrepresentation or non-disclosure of material facts.
- There are a number of requirements that SARS has set out that need to be met before a tax clearance certificate can be issued:
- You must have registered for income tax before applying for a tax clearance certificate.
- You should have no outstanding debt for any taxes (including income tax, Value Added Tax (VAT), dividend tax, administrative penalties and employees’ tax) and if you do, arrangements must have been made to settle this debt.
- Your tax returns and tax declarations must be up to date in the process of being assessed by SARS.
- All tax reference numbers contained in your documentation must be active and correct (not deregistered or suspended on the SARS system).
- The registration details on the application form must correspond with the information on the SARS system.
Make sure you’ve given yourself enough time to get the documentation you need – it can take up to 21 working days (essentially a month with weekends) for SARS to issue or decline a tax clearance certificate. To avoid wasting time, you should be 100% sure that all your tax affairs are completely in order before applying for your tax clearance certificate.
FinGlobal is here to help you get the SARS tax clearance you need
We’ve got all the tax expertise you could possibly need. Part of our service is helping you get the necessary tax clearance certificates in order to facilitate moving funds in terms of your foreign investment allowances or for financial emigration purposes in leaving South Africa. We’re always ready and willing to assist with the following tax services:
- Re-activating and updating tax records
- Registration and deregistration with the South African Revenue Service
- Application and processing of tax refunds
- Claim disallowed retirement contributions
- Submitting your tax returns
- Obtaining tax directives
- Dispute resolution
- Capital gains tax calculations
- General tax enquiries
Meeting your tax responsibilities is so much easier with the right expertise on your side. Our team includes financial planners, chartered accountants and tax specialists providing expertise in all areas of cross-border finance. Get in touch to discuss your requirements today.