There are many myths and misconceptions surrounding the tax obligations of South Africans living abroad. Some people think that simply by moving overseas and no longer being physically present in the Republic, that they are automatically relieved of their tax obligations. This leads them to believe that deregistering their tax number with the South African Revenue Service (SARS) is their next logical step in cutting their ties with the tax authority entirely. However, this is not the case. It is essential to understand that deregistering with SARS is not the way to terminate your income tax liability, and it should not be seen as a means to avoid filing tax returns in South Africa and having to declare your worldwide income.
What’s the big deal about deregistering your tax number?
Attempting to deregister for income tax with SARS without following the proper procedures can have unwanted legal consequences, particularly where you have not shown SARS that you have grounds to terminate your tax obligation. Think you can ghost SARS once you’re overseas? Not so fast. SARS has the authority to prosecute individuals who either provide inaccurate information about their whereabouts or claim to be unreachable. In certain cases, SARS has even been known to use social media platforms like Instagram and Facebook, as well as communication channels like WhatsApp or email, to serve legal actions. There is no escaping the long arm of the tax authority in the digital age.
Read more: SARS Alert: financial emigration doesn’t automatically make you a tax non-resident.
Who qualifies for income tax deregistration in South Africa?
To qualify for the deregistration of your personal income tax number with SARS as a South African living abroad, you must meet the following requirements:
- Maintain a fully compliant tax profile with SARS at the time of deregistration, with no outstanding or overdue returns, debts, or refunds.
- Possess no remaining assets in South Africa, including shares, trusts, properties, policies, companies, and bank accounts within the country.
- Be officially confirmed as a non-resident by SARS, which is done through the completion of the tax emigration process.
- Hold a valid Tax Residency Certificate from the foreign jurisdiction, where applicable.
Tax emigration from South Africa
As you can see, before you can deregister yourself as a taxpayer in South Africa, there are a few things you need to take care of first. Starting with tax emigration. Tax emigration is how you’ll cease your South African tax residency. It is a critical step as you will need to prove to SARS that your foreign income and assets are not subject to taxation in South Africa. If your foreign income remains taxable in South Africa, it must be declared on annual tax returns, and you will not be permitted to deregister for tax.
- How to declare foreign income on tax return to SARS
- How much foreign income is tax free in South Africa?
It is critical to ensure that your application for the cessation of tax residency is handled correctly, especially if your intention to leave South Africa is permanent.
Once all the necessary formalities are completed and approved, and you have no further taxable income or assets in South Africa, you should receive confirmation from SARS of your non-resident status, which means you can then proceed with the deregistration process.
Read more:
- How do I get my money out of South Africa via tax emigration?
- What you need to know about how exit tax is calculated in South Africa
How long does it take to deregister my income tax number with SARS?
Unfortunately, the process of deregistration can be lengthy and take anywhere from 3 to 18 months to finalise. This extended timeline is primarily due to the sizable backlog of deregistration applications. In most cases, SARS needs to first conduct an audit to confirm that all the necessary criteria are met, before the deregistration can be approved, which can be time consuming.
FinGlobal: cross-border financial specialists for South Africans abroad
Take the stress out of ceasing your South African tax residency and deregistering your South African income tax number by handing it over to the professionals. We’ve assisted thousands of expats in more than 105 countries with their financial transition, and we’d love to do the same for you. Whether it’s tax emigration, cashing in your retirement annuities or transferring your funds abroad, FinGlobal can ensure that every transaction is as painless as possible.
To see how FinGlobal can help, leave your contact details below and we’ll be in touch to discuss your requirements.