Just because you’re moving abroad doesn’t mean you can wave goodbye to your South African tax responsibilities. If you’re still considered a South African tax resident, you’re still on the hook for those taxes, even if you’re living thousands of miles away. This means you’ll need to keep filing those returns and paying your dues – no getting around it. And if you’re planning to formally cut ties with the South African Revenue Service (SARS) through tax emigration, understanding your tax compliance status is more important than ever.
So, let’s take a closer look at the SARS Tax Compliance Status System and what you need to know if you’re an expat or planning to emigrate.
Understanding tax residency status – the foundation of tax liability
Your tax liability in South Africa is linked to your tax residency status. You can qualify as a South African tax resident by way of either the ordinarily resident or physically present tests used by SARS in determining tax residency.
- Ordinary residence test – a subjective test that hinges on your intentions. If you intend to return to South Africa at some point in the future, you might still be considered a tax resident. This test, when applied by SARS, examines your personal, social, financial and business circumstances to determine whether or not you intend to permanently leave the country.
- Physical presence test – this objective test counts the number of days you’ve spent in the Republic. If you spend more than 91 days in a year of assessment, you may be considered a tax resident.The test consists of three requirements all of which must be met. The person must be physically present in South Africa for a period or periods longer than:- 91 days in total during the tax year under consideration;
– 91 days in total during each of the five previous tax years; and
– 915 days in total during these five previous tax years.
Read more: Breaking tax residency with SA: when to apply the physical presence or ordinary residence test.
The only way to change your South African tax residency status is to complete tax emigration through SARS. This means that for individuals who emigrated before March 2021 and who completed financial emigration through the South African Reserve Bank, your tax residency status must now be clarified with SARS. This is because financial emigration does not automatically equate to tax emigration.
Read more: Expats, avoid nasty surprises from SARS, verify your non-resident tax status today!
Tax compliance tips for South African expats who have already emigrated:
- Assess your current residency status and determine if you meet the criteria for tax emigration.
- File all outstanding tax returns with SARS and if you owe any taxes, make arrangements to settle them promptly.
- If you meet the requirements, explore the possibility of ceasing your tax residency with SARS, through tax emigration.
Read more:
Tax compliance tips for South African expats planning to emigrate:
- Call in the pros: Consulting with a tax advisor specialising in cross-border taxation is one of the best moves you can make. They can provide tailored guidance based on your specific circumstances.
- Plan ahead: Start planning your tax affairs well in advance of your emigration. This allows for proper planning and minimises potential risks.
- Document everything: Maintain thorough records of your income, expenses, and any interactions with SARS. (Keep old passports)
- Stay informed: Make sure you’re on top of any changes in South African tax laws, as they can impact your obligations.
Read more: Made your decision to emigrate? What are the next steps?
Tax Compliance Status 101 – tax reporting requirements for South African expats
Regardless of your tax residency status, it’s still a good idea to file an annual tax return with SARS. This is vital, even if you don’t owe any tax. Failing to comply with South African tax laws can have serious consequences, including:
- Penalties and interest: SARS may impose penalties and interest on unpaid taxes.
- Legal action: In severe cases, legal action may be taken.
- Reputational damage: Non-compliance can damage your reputation and creditworthiness.
As a non resident you are still liable to declare your SA sourced income to SARS e.g. interest earned from SA bank account.
Don’t assume you’re exempt: verify your South African tax residency and tax compliance status today!
If it isn’t already clear to you, it’s vital to understand that moving abroad doesn’t automatically absolve you from South African tax obligations. As long as you’re considered a South African tax resident, you remain responsible for fulfilling your tax duties regardless of your current location. South African tax residents are liable to declare worldwide earnings to SARS.
Proactive Tax Status Compliance verification
To ensure your tax affairs are in order, it’s essential to proactively verify your tax residency status with SARS. Many South Africans living abroad have had their tax compliance status changed back to “resident” by SARS without possibly being aware of it. This can cause a huge shock when you discover that the tax authority is looking for you, to slap you with a hefty tax bill.
By proactively investigating your Tax Compliance Status with SARS now you can prevent unexpected tax liabilities and ensure you are compliant with South African tax laws.
Tax Status Compliance for expats: responding to SARS requests
If you receive a communication from SARS requesting verification of your tax residency, it’s vital to respond promptly and accurately. Ignoring these requests can have serious consequences, and result in tax non-compliance.
Read more: The dangers of not completing tax emigration after you leave South Africa.
The truth about Tax Compliance Status: SARS isn’t going away
If you thought you could disappear to the other side of the globe and that SARS would never find you, we’re here to tell you otherwise.
Make no mistake – SARS will find you. SARS has outlined a robust strategy to achieve its 2024/25 tax revenue target of R1 840.8 billion, with a strong emphasis on voluntary compliance. To expand the tax base, detect dishonest taxpayers, address tax avoidance, enhance debt collection, and improve service levels, SARS will leverage data science and artificial intelligence. SARS has plans to broaden the tax base by utilising third-party data sources such as banks and medical schemes, and will be using predictive modelling to ensure all taxpayers and traders are registered, file returns, and fulfil their tax obligations.
SARS has unequivocally stated that it will not tolerate wilful non-compliance. Taxpayers who deliberately misrepresent their financial status or fail to meet their tax obligations can expect to face significant legal and administrative consequences.
Read more:
- Left South Africa without informing SARS? What now for your tax resident status?
- Steps to take if your SARS tax compliance status shows as “non compliant”
So. What do you need to know about the SARS Tax Compliance Status system?
The SARS Tax Compliance Status (TCS) system is an online platform that allows taxpayers to:
- View their tax compliance status: This provides a real-time overview of your tax affairs, highlighting any outstanding obligations or areas requiring attention.
- Request a Tax Compliance Status (TCS) PIN: This PIN can be shared with third parties (such as banks or government agencies) to allow them to verify your tax compliance status online through the SARS eFiling system.
Read more: Top tips for staying under the radar with SARS.
What is a Tax Compliance Status PIN?
The SARS Tax Compliance Status (TCS) PIN is a unique code generated within the SARS eFiling system. It allows authorised third parties (like banks, government agencies, or employers) to verify your current tax compliance status (in real time) with SARS directly through the eFiling platform.
Read more: SARS tax compliance status verification: how, when, why?
How to get a TCS PIN: here’s how the TCS PIN verification process works:
- You request a TCS PIN: You initiate the request for a TCS PIN within your SARS eFiling profile.
- SARS issues a PIN once you provide supporting documents: Once your request is processed, SARS generates a unique PIN for you. (AIT)
- Sharing the PIN: You share this PIN with the authorised third party who needs to verify your tax compliance.
- Third-party verification: The third party uses your provided PIN and your Tax Reference Number (TRN) to access your tax compliance status on the SARS eFiling system.
What do expats need a Tax Compliance Status PIN for?
Even though you’ve moved away, as an expat you’ll still need these digits from SARS to streamline various processes and facilitate interactions with third parties while living abroad.
The TCS PIN can be essential for facilitating certain international transactions such as applying for visas or residency permits in other countries, as some authorities require proof of tax compliance in your home country. You might also need it to open bank accounts or apply for credit in foreign countries, as many financial institutions require proof of tax compliance as part of their due diligence procedures.
Most importantly, you’ll need this string of digits if you want to transfer money or assets out of South Africa. SARS now requires, as part of their revised procedure for international transfers, proof that you are compliant. As such, you’ll need to hand over your TCS PIN before they’ll give the all-clear on international money transfers. It’s also important to note, that along with a TCS PIN, you’ll also need a Non-Resident Confirmation Letter from SARS when making international transfers out of South Africa.
How do you get a tax clearance certificate from SARS?
It’s important to note that SARS does not issue physical tax clearance certificates anymore. You’ll now need a TCS PIN, which provides real-time verification of your tax compliance status.
- Good standing or
- Approval International Transfer (AIT)
Read more: Clearing the confusion – a handy guide to obtaining your SARS tax clearance.
FinGlobal: cross-border tax specialists for South African expats
Finding your way through the Tax Compliance Status system as an expat can be stressful. SARS is regularly updating processes and adding new requirements, so it can feel overwhelming attempting it on your own.
Let FinGlobal simplify your South African taxes. We specialise in:
- Expat tax compliance: Ensure you meet your South African tax obligations
- Tax refunds: Maximise your returns and claim what you’re owed
- Retirement annuity encashment: Withdraw your South African RA funds and move your money overseas, safely.
- Smooth international transfers: Move funds abroad with ease and confidence.
We prioritise client satisfaction and strive to make your tax compliance journey as smooth and stress-free as possible. By entrusting your tax matters to our experienced team, you get the peace of mind that comes from knowing your financial affairs are in capable hands.
Ready to take the next step? Simply fill out the form below, and one of our expert cross-border tax advisors will contact you to discuss your specific tax needs and provide a tailored solution.