With so much paperwork involved when it comes to emigration, it’s not hard to get overwhelmed and lose track of what’s required. To help you stay on top of things, we’ve put together a useful guide on how to get a tax clearance certificate that verifies your tax compliance status with SARS.
What is a Tax Clearance Certificate and what do I need it for?
To prove that your tax affairs are in order, the South African Revenue Service issues a document called a Tax Clearance Certificate. This officially verifies that you are in good standing with the tax authority because you have no tax owing.
There are three kinds of Tax Clearance Certificates you could possibly need:
- Tax clearance for good standing: if you’re applying for tenders with the South African government, or if you’re doing business with corporates.
- Tax clearance for foreign investment allowance purposes: if you’re making use of the foreign investment allowances available to you as a South African temporarily abroad (i.e: you have not completed financial emigration).
- Tax clearance for emigration purposes: if you’re applying for financial emigration proof of tax compliance status is required before your application will be processed.
Please note: if you’ve already permanently relocated from the Republic and it’s been more than five years since, it will not be necessary for you to obtain a Tax Clearance Certificate if you do not have any assets other than insurance policies or an inheritance.
What are the requirements for a Tax Clearance Certificate for emigration purposes?
As a first time emigrant the following documentation must be provided:
- Statement of assets and liabilities for the previous three tax years (disclosing all investments, loan accounts and payouts from local and foreign companies, trusts, etc.)
- A completed Form MP336(b) – ‘Emigration: Application for foreign capital allowance’ that has been stamped and verified by an Authorised Dealer (such as a bank); or
- Where the individual has been advised not to submit an MP336(b), they must furnish a letter from the authorised dealer with an explanation of unsuitability.
- Where the individual has left the country long ago and has no assets and liabilities remaining in South Africa, Nil assets and liabilities must be declared on the MP336(b)), and a Nil Statement of assets and liabilities for the previous three tax years must be submitted.
- Applicable Power of Attorney documentation to authorise the submission of the application on an individual’s behalf.
- Capital Gains Tax calculation on the deemed disposal of assets on the day before the individual ceased to be a resident for tax purposes.
Read more about the documentation required with tax clearance for emigration purposes.
Does SARS still issue printed tax clearance certificates?
It’s true. SARS no longer issues printed Tax Clearance Certificates. Instead, this system is being replaced with a more secure, digital Tax Compliance Status (TCS) system. Tax Clearance Certificates themselves will soon be replaced with a Tax Compliance Status PIN that can be used on the eFiling platform. This PIN will provide a safe, up-to-date way for third parties to verify your tax compliance status online using the eFiling platform, without compromising any of your other confidential tax-related information.
How does the Tax Compliance Status (TCS) system work?
This is the digital replacement for the paper-based Tax Clearance Certificate system that lets you obtain a TCS PIN in real-time, instead of the hassle of applying manually. With this system, your tax compliance status is not static as it changes in line with your tax behaviour, in other words compliance must be maintained.
Tax clearance requirements: what do I need to be tax compliant?
To be tax compliant, you should ensure that you are:
- Registered for all required tax types
- Submitting tax returns on time
- Paying all your tax debt on time
How to get tax clearance: obtaining your Tax Compliance Status (TCS) PIN via eFiling:
- Make sure you have Adobe Flash installed and enabled. Go to www.adobe.com if you need to download it.
- Sign in to eFiling. If you’re not already registered, go to www.sarsefiling.co.za
- You need to be registered for eFiling and have one tax type activated on your eFiling profile, in order to activate the TCS service.
- Activate your TCS service. You’ll only need to do this once.
- Once your service is active, you’ll have a “My Compliance Profile” tab on your screen.
To request a Tax Compliance Status PIN on eFiling, open the “My Compliance Profile”:
- Choose the Tax Compliance Status Request option.
- Select the type of TCS from the following options:
- Good standing
- Foreign Investment Allowance (individuals only)
- Emigration (individuals only)
- Complete the Tax Compliance Status Request form and submit.
- You will receive your PIN immediately via SMS or email if your tax affairs are in order.
FinGlobal: Financial emigration and expat tax experts for South Africans
- 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
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