One of the most stressful parts of being a South African expat is dealing with SARS. Everything tax-related just seems to be extra complicated, especially from outside the country. If you need to get a tax clearance certificate from SARS, you’ll find this post especially helpful.
What is a tax clearance certificate in South Africa
Long story short, a tax clearance certificate is a document with the stamp of approval from the South African Revenue Service that says your tax affairs are up to date with no tax outstanding.
What would you need a SARS tax clearance certificate for?
If a tax clearance certificate serves as confirmation that the applicant’s tax affairs are in order, it makes sense that you would need one whenever you are asked to provide proof of good tax standing. This tax clearance certificate will be necessary if you want to transfer any funds overseas using your foreign investment allowances and if you’re considering emigration.
How do you get a SARS tax clearance certificate?
Before you can apply for tax clearance, you need to know what kind of clearance you’re applying for. There are three major types:
- Tax clearance certificate to verify good standing:
- Used in the application for South African government tenders and to verify tax compliance, usually for the purposes of engaging with other businesses. Applying for this type of tax clearance certificate can take up to five working days.
- Tax clearance certificate for foreign investment allowance purposes:
- Used to apply for foreign investment allowances available to South Africans abroad, without financial emigration. Applying for this type of tax clearance certificate can take up to 21 working days.
- Tax clearance certificate 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. Applying for this type of tax clearance certificate can take up to 21 working days
Some important things to note about your tax clearance application
- Your reason for seeking tax clearance must be properly stated on your application.
- The tax clearance certificate issued by SARS is only valid for one year from the date of issue, as long as you are compliant during this period.
- If the tax clearance certificate was erroneously issued by SARS, it can be withdrawn at any time. This applies where clearance was obtained through fraud, misrepresentation or non-disclosure of material facts.
What SARS requirements do you have to meet for a tax clearance certificate?
SARS loves a list of requirements and you’ll have to meet them all before a tax clearance certificate can be issued to you.
- You must have registered for income tax before applying for a tax clearance certificate. (This makes sense, right?)
- You should have no owing amounts for any taxes (this includes income tax, Value Added Tax (VAT), dividend tax, administrative penalties and employees’ tax) but if you do, arrangements need to be made to settle this debt.
- Your tax returns and tax declarations must be up to date before being assessed for tax clearance.
- 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 exactly with the information on the SARS system.
As with anything bureaucratic, you’ll want to apply with enough time to spare before you need it. It can take up to 21 working days (which can be more than a month with weekends) for SARS to decline or issue a tax clearance certificate. To ensure you don’t waste time, you should be 100% certain that all your tax affairs are completely in order before applying for your tax clearance certificate from SARS.
FinGlobal: Experts in Financial Emigration from South Africa
Looking for expat tax experts? We’ve got them all in house. Part of our service offering for South Africans living abroad is assistance in obtaining the necessary tax clearance certificates in order to facilitate moving funds in terms of foreign investment allowances or for financial emigration purposes when leaving South Africa.
We can’t wait to help you with any of the following tax services:
- Re-activating and updating tax records
- Registration and deregistration with SARS
- Application and processing of tax refunds
- Claim disallowed retirement contributions
- Submitting your tax return
- Obtaining tax directives
- Dispute resolution
- Capital gains tax calculations
- General tax enquiries
Meeting your tax responsibilities and maintaining tax compliance is so much easier with the right expertise to call on. Our dedicated team includes financial planners, chartered accountants and tax specialists with all the right credentials ready to provide guidance in all areas of cross-border finance. Get in touch to discuss your tax requirements today.