The South African Revenue Service (SARS) strives to streamline tax compliance for all citizens. When taxpayers maintain transparency and diligence, their interactions with SARS are typically smooth. However, neglecting compliance or overlooking vital steps in the Approval for International Transfer (AIT) process can lead to complications. Specifically, a revoked Tax Compliance Status (TCS) PIN can severely disrupt international money transfers from South Africa. To avoid this and any other stress-inducing scenario in which your money is unnecessarily delayed, as a South African living and working abroad, it’s essential to understand what is required of you from an exchange control and tax regulatory perspective. With this in mind, let’s consider what SARS wants you to know before repatriating money from South Africa.
Approval for International Transfers (AIT) process from SARS
A lot has changed in the way cross-border transactions are handled. As part of a larger modernisation exercise in exchange control regulations and mechanisms in April 2023, the South African Revenue Service (SARS) revamped the process for those seeking to make an international money transfer from South Africa.
Previously, tax clearance applications were handled under separate categories like “Emigration” or “Foreign Investment Allowance.” Everything falls under a single umbrella: the SARS Approval for International Transfers (AIT) process.
Read more: Limits on international money transfers out of South Africa – what you need to know.
Who needs AIT approval from SARS?
- Tax residents: If you need to transfer more than R1 million out of SA in a calendar year, you’ll need SARS AIT approval to utilise your Foreign Investment Allowance.
- Tax non-residents: With a few exceptions, you will likely need SARS AIT approval for an international money transfer (regardless of the amount).
What information does SARS require on the AIT application?
The new SARS AIT process is designed to promote transparency in the tax system, which requires the disclosure of more detail than was previously required when moving money offshore from South Africa.
Now, SARS is interested in knowing the following about you:
- Your tax residency status: You’ll need to confirm your tax residency status with SARS so they know how to handle you.
- Your financial situation: You’ll need to disclose the sources of the funds you’re transferring and a statement of local assets and liabilities.
Expats, beware! If you have already physically emigrated from South Africa, you must complete tax emigration before starting the AIT process. A significant paperwork requirement for individuals seeking to transfer funds out of South Africa is the Non-Resident Confirmation Letter from SARS. This is proof that you’ve been officially acknowledged as a non-resident for tax purposes and that your exit was squared away by the tax man.
Read more: How and why to obtain a SARS Non-Resident Tax Status Confirmation Letter.
You will also need to indicate to SARS on your application for the AIT TCS PIN:
- If you are a beneficiary of a trust
- If you own 20% or more of any company’s shares—either directly or indirectly, and
- If you have any existing loans from local/foreign trusts,
Read more: How to get your money out of South Africa via SARS Approved International Transfer.
A real-life cautionary tale in SARS AIT process compliance
A taxpayer’s recent experience illustrates the potential pitfalls of overlooking SARS’s documentation demands. Her scheduled international money transfer from South Africa was abruptly halted due to a cancelled Tax Compliance Status (TCS) PIN, a necessity for international transactions. The reason for the SARS cancellation? Insufficient and outdated documents were submitted in support of her AIT application, which was a mistake that could have been avoided if due care had been paid to clearly stated procedural requirements. This case is a stark lesson that failing to meet strict standards, even after initial approval, can result in the cancellation of a TCS PIN by SARS.
What are the consequences of a revoked TCS PIN in the AIT process?
- Transaction delays: Reapplication is required, and planned transfers are postponed.
- Administrative burdens: Gathering and re-submitting documentation is time-consuming.
- Financial and reputational risks: Delays can lead to financial losses and damage stakeholder relationships.
What are the most common reasons for TCS PIN cancellation?
- Inadequate or outdated paperwork: SARS demands current documentation, such as financial statements no older than 14 days.
- Errors in initial approval: SARS may correct mistakes, leading to revocations.
- Failure to meet specific requirements: Each TCS PIN application has unique criteria.
Read more: Avoiding common pitfalls when transferring funds abroad from South Africa.
Preventing TCS PIN issues when transferring funds from SA
Want to move money out of South Africa without headaches? It all starts with tax compliance. SARS cares about one thing: you are playing by the rules. If your taxes are in order, your transfers will go smoothly. If not, expect trouble with your TCS PIN.
How to stay on the right side of the tax authority when seeking approval for international transfers:
- Up-to-date records: Keep your financial, bank statements and tax papers current. SARS wants to see you’re organised.
- Know the rules: Each transfer has its paperwork. Learn what SARS needs before you apply.
- Triple-check everything: Before sending anything to SARS, check it over twice and then recheck it. Mistakes cause delays.
- Get help if needed: Talk to a tax expert if taxes confuse you. They can keep you out of trouble.
Bottom line: Good tax habits mean easy money transfers. Skip the tax work, and you’ll run into problems with SARS.
Read more: Top tips for staying under the radar with SARS.
Transferring funds from SA – what to do if your TCS PIN is cancelled
If SARS cancels your TCS PIN, carefully review the notice from SARS to identify what went wrong; address any missing or outdated documents and ensure all information is correct; resubmit the application with updated documentation and a clear explanation. If you’re unsure what to do next, engaging a tax professional to take charge of the situation would be best.
FinGlobal: let us handle your SARS AIT application for you
What is the smartest way to ensure smooth international money transfers from South Africa? Bring FinGlobal in from the start. Our team of tax advisors and cross-border financial experts ensures your application hits all the right notes with SARS, cutting down the risk of rejection or cancellation.
Plus, we can handle various other tax-related issues for South Africans living around the globe. Need to reactivate old tax numbers? We’ve got you. Want to claim a tax refund or sort out a tricky tax dispute? We handle that, too. We also help with filing tax returns for residents, non-residents, and expats, claiming disallowed retirement contributions, getting tax directives, figuring out capital gains tax, and even walking you through tax emigration or deregistration. If it involves South African taxes, we’ve got you covered.
Please contact us today to learn more about FinGlobal’s trusted services and how we can streamline your international money transfers from South Africa.