With the tax filing season on the horizon, the South African Revenue Service (SARS) is intensifying its drive to recover unpaid taxes, including from citizens residing abroad.
Nicknamed a game-changer within Sars, this new initiative aims to address compliance gaps and drive recovery of an additional R70 billion over three years. This ambitious goal will rely on more rigorous tax collection processes, increased enforcement, and expanded scrutiny of taxpayers.
South African Revenue Service launches project Ama Billions initiative
At the core of these efforts lies “Project AmaBillions.” Aptly named, this push reflects the drive to reclaim billions in unpaid taxes.
Key areas of focus for Sars include auditing high-net-worth individuals, businesses, and historically non-compliant industries. By deploying advanced data analytics, Sars can now identify inconsistencies in tax declarations more effectively and detect undeclared earnings.
What expats should know about this SARS’ initiative
Ceasing tax residency in South Africa
For South Africans who have relocated or are planning to move abroad, ceasing tax residency is a critical process. Until you formally apply for a change in your tax residency status, Sars will regard you as a tax resident in South Africa, making you liable for tax on your worldwide earnings and assets.
Declaring a cessation of your tax residency helps prevent double taxation and ensures your tax status is properly updated in Sars’ systems. To initiate this change, individuals must update their status via the Sars eFiling platform by completing the Registration, Amendments, and Verification Form (RAV01). Additional documentation may be required to demonstrate eligibility, assessed based on the “ordinarily resident” or “physical presence” tests.
Foreign employment income unit
Sars has developed a Foreign Employment Income Unit to monitor South Africans working abroad and ensure compliance with tax obligations. Focused particularly on those earning over R1.25 million annually, this unit ensures transparency in taxing foreign employment income.
Its functions include issuing confirmation letters for non-resident tax status and leveraging global data-sharing systems to monitor income earned internationally. Through these measures, Sars seeks to enhance compliance among expatriates and ensure all foreign-generated income is appropriately taxed.
Advanced data sharing
Sars has significantly expanded its ability to identify non-compliance through improved third-party data-sharing mechanisms. This system aggregates information from local and international entities, including banks, retirement funds, medical insurers, and property registries.
Advanced machine learning models analyse this data to detect inconsistencies or undeclared income. For example, the system identifies individuals with high-value assets or considerable economic activities who fail to accurately declare their earnings.
Final thoughts for South Africans abroad
Living abroad doesn’t exempt South Africans from fulfilling their tax responsibilities. By leveraging advanced technology, data-sharing agreements, and cooperative frameworks with global partners, Sars ensures that compliance extends far and wide.
These initiatives underline SARS’ commitment to accountability and emphasize the importance of fulfilling tax obligations. Regardless of where you are in the world, staying informed on Sars’ processes is essential to maintaining compliance and avoiding potential penalties.
FinGlobal: tax specialists for South African expats
So, there you have it. Dealing with South African taxes while living abroad doesn’t have to be a headache. It boils down to knowing the rules, keeping good records, and not being afraid to ask for help. By being aware of the common mistakes expats make, you can avoid those nasty surprises and keep your tax affairs in order, freeing you up to enjoy your new overseas chapter.
But if all this talk of South African tax residency, double tax agreements, and foreign income exemptions is making your head spin, don’t worry. That’s where FinGlobal comes in. Whether you’re looking to claim a tax refund, need help with expat tax compliance, or are thinking about becoming a non-resident for tax purposes via tax emigration, our team has the expertise to guide you through every process, ensuring the best possible outcome.
Contact FinGlobal today to avoid expat tax mistakes and streamline your tax obligations in South Africa.