How SARS has changed tax compliance status reporting for transferring funds abroad

The South African Revenue Service (SARS) wishes to provide an update with respect to the matter of Tax Clearance Status.

As the previous Tax Clearance Status (TCS) solution had been operational since April 2016 and processed substantial and growing volumes of taxpayers requesting 3rd party verification requests, including Foreign Investment Allowance and Emigration, there was need for an enhancement to the system to rationalise and speed it up. In addition, following the announcement of the abolition of emigration as an exchange control concept in 2020, the South African Reserve Bank (SARB) has removed the requirement to apply to emigrate financially (the MP336 application). This has necessitated changes to SARS’ processes and forms.

The enhanced TCS system was introduced on 24 April 2023 following consultations with authorised dealers and the SARB. It supports the strategic objectives of SARS to make it easier for taxpayers to comply. It also entrenches TCS verifications in Government, private sector, and individual taxpayer space, either voluntarily or via legislation. Whilst for compliant taxpayers this makes it easy, it will be harder for taxpayers who are unwilling to comply. The enhanced TCS system also aims to dramatically improve turnaround times for taxpayers and traders that are compliant.

The additional information requested on the Approval for International Transfer (AIT) Application, allows SARS to ensure that all required tax payable has been accounted for and, if required, address any non-compliance that is detected through a verification and/or an audit. This forms part of the SARS modernisation journey that aligns to our strategic intent of voluntary compliance.

No TCS is required for yearly transfers up to R1 million. SARS is of the view that taxpayers applying for more than the yearly R1 million single discretionary allowance, are sophisticated taxpayers who should reasonably have records of the cost price of major assets they own. This includes their local and foreign fixed properties, listed/unlisted investments, crypto assets and cash in bank to name a few. If the taxpayer does not own a particular type of asset, that should be captured as zero on the asset and liability part of the application form.

SARS has published a comprehensive external guide to the changes that can be accessed on the SARS external website using the following link https://www.sars.gov.za/gen-elec-08-g01-guide-to-the-tax-compliance-status-functionality-on-efiling-external-guide/.

SARS has also published an updated guide as to the documentary requirements for AIT applications for individual taxpayers that can be accessed through the following link https://www.sars.gov.za/individuals/manage-your-tax-compliance-status/supporting-documents-for-obtaining-approval-international-transfers/.

For further information, please contact SARSMedia@sars.gov.za.