If getting your South African tax clearance is something that’s been lingering on your to-do list, here’s what you need to know to get it sorted.
Tax compliance is important for South Africans living abroad, because tax residents are required to file a tax return with the South African Revenue Service (SARS), declaring and paying tax on foreign employment income where it exceeds R1.25 million per annum.
South Africans who have ceased tax residency by no longer meeting the requirements of the physical presence test (remaining outside of SA for an uninterrupted period of 330 days) should make their tax non-resident status official with SARS by completing tax emigration and paying the associated exit tax.
Tax clearance from SARS
What is tax clearance from SARS?
It is the official confirmation that validates your tax compliance status. Issued by the SARS, it proves that your tax affairs are in order as of the date of issue. Even if you are in tax arrears, it is still possible for SARS to issue this clearance if you’ve made an installment arrangement to pay off this tax debt.
There are five main reasons you might need tax clearance from SARS, such as where you intend to –
- Cease tax residency through tax emigration
- Apply for government tenders or bids
- Conduct business with companies that require proof of tax compliance
- Move money out of South Africa using your Foreign Investment Allowance (also referred to as foreign capital allowance).
- Transfer income earned in South Africa once you have ceased tax residency.
SARS no longer issues printed tax clearance certificates and this has been replaced with a more secure, digital Tax Compliance Status (TCS) system.
- Tax Clearance Certificates have been replaced with a Tax Compliance Status PIN used on the eFiling platform.
- This PIN will provide a safe, up-to-date way for third parties to verify tax compliance status online using the eFiling platform, without compromising any other confidential tax-related information.
How does the Tax Compliance Status (TCS) system work?
This is a digitisation of the paper-based Tax Clearance Certificate system that gives taxpayers the ability to obtain a TCS PIN in real-time, which simplifies the headache of a manual application. This system allows for a dynamic display of the individual’s tax standing, indicating the necessity to maintain compliance through proper tax conduct.
Tax clearance requirements: what do you need to be tax compliant?
To be tax compliant, you will need to:
- Be registered for the required tax type/s
- Submit tax returns on time
- Pay all your tax debt on time
How to get tax clearance
You can now request your Tax Compliance Status (TCS) PIN via eFiling:
- Adobe Flash must be installed and enabled. To download it, go to www.adobe.com.
- Log in to eFiling. If you’re not already registered, go to www.sarsefiling.co.za.
- You must have one tax type activated on your eFiling profile before you can activate the TCS service.
- Activate your TCS service. You’ll only need to do this once. You’ll know it’s active when you see 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 your TCS from the following options:
- Good standing
- Foreign Investment Allowance (individuals only)
- Emigration (individuals only)
- Complete the Tax Compliance Status Request form and click submit.
Got a complicated tax situation? We’d love to hear about it
If all this paperwork and admin sounds like hard work to you, you’ll be pleased to know you can outsource your tax compliance and tax clearance to us.
When it comes to expat tax compliance matters, FinGlobal should be your first choice. We offer a full range of tax-related services for South Africans living and working abroad, and you can track every step of our progress online as we handle on your behalf:
- 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
- Tax emigration
- Capital gains tax calculations
- General tax enquiries
To see how our full expat tax offering can simplify your tax situation, leave us your contact details.