When it comes to money there’s nothing that escapes the taxman’s attention, so you’ll want to get the nod from the South African Revenue Service before you make any cross-border financial moves. To help you stay on the right side of the law and minimise the possibility of any delays, we put together this handy guide to walk you through getting a tax clearance certificate in South Africa.
What is a Tax Clearance Certificate?
A Tax Clearance Certificate is a document that is issued to you by the South African Revenue Service to provide proof that your tax affairs are in order. A tax clearance certificate shows that you owe SARS no tax and that you (and your business) are in good standing with the tax authority.
Tax Clearance Certificates are currently being phased out and will soon be replaced with a Tax Compliance Status PIN. This will give you a way to authorise a third party to ascertain your tax compliance status online using the eFiling platform.
- The PIN will enable the viewer to verify your current tax compliance status online.
- It will present your overall compliance status as at the date and time it is checked, instead of your status at the date of issue.
- All other tax information relating to you will not be accessible using this PIN.
What is the purpose of a tax clearance certificate in South Africa?
There are three kinds of tax clearance certificates in South Africa; each with a different purpose.
Tax clearance for good standing:
- Required when applying for tenders with the South African government.
- Required for the purposes of doing business with other companies.
Tax clearance for foreign investment allowance purposes:
- Required to make use of foreign investment allowances available to South Africans abroad, without financial emigration.
Tax clearance for emigration purposes:
- Required before financial emigration to provide proof of tax compliance when processing financial emigration.
How long does it take to get a tax clearance certificate in South Africa?
- Tax clearance for good standing: Can take up to 5 working days.
- Tax clearance for foreign investment allowance purposes: Can take up to 21 working days.
- Tax clearance for emigration purposes: Can take up to 21 working days.
How do I get a tax clearance certificate in South Africa?
Before a tax clearance certificate can be issued, please note the following about SARS’ requirements:
- You must be a registered income taxpayer before you can apply for tax clearance.
- You must have zero outstanding tax debt (including income tax, Value Added Tax (VAT), dividend tax, administrative penalties and employees’ tax) and if you do, SARS must approve your arrangements to settle this tax liability.
- You must be up to date with tax returns and tax declarations or in the process of being assessed.
- All tax reference numbers must be active and correct which means they must not be inactive, deregistered or suspended on the SARS system.
- Registration details must match data captured on the SARS system, no match with the details on the application form means no go.
Before we go into the process and documents required in getting a tax clearance certificate, here are some tips to ensure everything goes smoothly:
- Make sure you’ve given yourself enough time to get the documentation you need because it can take up to 21 working days (essentially a month when you factor in weekends) for SARS to issue or decline a tax clearance certificate.
- Make 100% sure that all your tax affairs are completely in order before applying for your tax clearance certificate to avoid having yours declined and having to start the clock over because you need to apply again.
What documents are required to get a tax clearance certificate in South Africa?
TAX CLEARANCE CERTIFICATE FOR FOREIGN INVESTMENT ALLOWANCE
You are required to submit the following supporting documents with your application:
- Relevant paperwork to demonstrate the source of the capital to be invested.
- Statement of assets and liabilities for the previous three tax years (in this you must disclose all your investments, loan accounts and distributions from local and foreign companies, trusts, etc.)
- Applicable Power of Attorney documentation where the application is submitted on behalf of a taxpayer.
Read more about the documentation required to verify the source of the capital you’re investing.
TAX CLEARANCE CERTIFICATE FOR EMIGRATION PURPOSES
Where you are a first time emigrant you will need to provide the following documentation:
- Statement of assets and liabilities for the previous three tax years (you must disclose all your investments, loan accounts and distributions from local and foreign companies, trusts, etc.)
- A completed Form MP336(b) – ‘Emigration: Application for foreign capital allowance’ that has been stamped and signed by an Authorised Dealer (such as a bank); or
- Where the authorised dealer (such as your bank bank) has advised you not to complete an MP336(b), they must furnish a letter as to the reasons why it is unsuitable.
- Where you previously emigrated without formalising your emigration with South African Reserve Bank (SARB) or left the country long ago and have no assets and liabilities remaining in South Africa, Nil assets and liabilities must be declared on the MP336(b)), and a Nil Statement of assets and liabilities for the previous three tax years must be submitted.
- Applicable Power of Attorney documentation to authorise the submission of the application on your behalf.
- Capital Gains Tax calculation on the deemed disposal of assets on the day before you ceased to be a resident for tax purposes.
Read more about the documentation required with tax clearance for emigration purposes.
How to query your tax compliance status in South Africa: leave it to FinGlobal
When it comes to expat tax compliance matters, FinGlobal should be your first choice in cross border financial service providers. We offer a full range of tax-related services for South Africans living and working abroad, including:
- Tax Refunds
- Tax Clearance
- Tax Exit
To get started on your confidential SARS assessment, leave us your contact details and we’ll be in touch!
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