Changes to the Tax Compliance Status Process

SARS has made some enhancements to the Tax Compliance Status Process, effective 24 April 2023. 

Individuals are required to be “Tax Compliant” before obtaining the prerequisite Foreign Tax Clearance to transfer funds abroad under their annual allowances, granted by the SARB.

There has been much confusion as a result of the changes, however in essence, the effect is merely a change in process and not in regulation.

Whilst South African “tax resident“ individuals can transfer up to R1-million abroad under their annual Single Discretionary Allowance (SDA) before requiring foreign tax clearance approval from SARS for further transfers under their Foreign Investment Allowance (FIA) in the same calendar year, individuals who have ceased tax residency in South Africa require clearance for any and all funds transferred abroad.

To manage this in the past, SARS made provision for two types of TCS pins, namely an “Emigration” and a “Foreign Investment Allowance” (“FIA”) TCS pin. 

The former is required by persons transferring funds out of South Africa following the cessation of their South African tax residency, while the latter is required for Foreign Investment Allowance (FIA) transfers out of South Africa. 

In an attempt to align and simplify the process, the changes were made by SARS so that these two are now, effectively, one and the same, and referred to as an “Approval for International Transfer” or “AIT”.

Furthermore, some changes have been made to the information requirements that must accompany an  application for an AIT.  These are as follows:

1. Statement of assets and liabilities for the previous three years should be split between local and foreign. 
2. Whether the applicant is a South African tax resident or not.
3. Whether the applicant is a beneficiary of a local or foreign trust.
4. Whether the applicant has an interest in any local or foreign entity (either directly or indirectly) of 20% or more.
5. Whether the applicant has any loans held in local or foreign trusts.

More detailed information on the above can be found on the SARS website here. 

As always, we are here to assist with and navigate the challenges which Exchange Control pose for you, giving you peace of mind with expert advice from our specialist teams.

Should you have any questions or require more information relating to the changes, please do not hesitate to contact us by emailing enquiries@currencypartners.co.za.