TAX CLEARANCE PROCESS AMENDMENT

by | Jul 1, 2023

On 24 April 2023, the South African Revenue Service (SARS) implemented system changes to align the tax clearance processes applicable to the foreign investment and emigration allowances.

Part of these changes includes adjusting the definition of what it means to be tax compliant and will be focusing on continuous tax compliance enhancements.

This means that the ‘Approval of International Transfer (AIT)’ replaces the existing ‘Emigration’ and ‘Foreign Investment Allowance (FIA)’ application types.

Change to the process is the additional information that SARS now requires as part of the AIT, which includes the following:

  • Statements of assets and liabilities must be split between foreign and local
  • Tax status (resident or non-resident)
  • Are you a beneficiary of a trust (foreign or local)
  • Do you have a shareholding (directly or indirectly) in any legal entity of 20% or more (foreign or local)
  • Have you made a loan/s to a trust (local or foreign)

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.

Previously, the FIA (R10m) required the completion of a SARS FIA001 Form. This would generate a TCS (Tax Compliance Status) PIN for foreign investment. Emigrants followed a similar process but would be issued a TCS PIN for emigration. This has now been consolidated into a single clearance process, namely the AIT.

SARS has also published an updated guide, confirming the documentary requirements for AIT applications 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/. 

The above changes are applicable to the tax clearance process, and it is important to note that no changes have been made on the Exchange Control side. The allowances applicable to South African resident individuals, as well as those who have ceased to be residents for tax purposes (emigrants) remain unchanged and can be summarised as follows:

  • The annual R1m Single Discretionary Allowance is available to all South African resident individuals, 18 years and older. It is only available to emigrants in the calendar year that they leave South Africa
  • Any further capital transfers for residents or emigrants require tax clearance in terms of the AIT process. SARB approval is also required for applications in excess of R10m
  • the new process applies to new applications and does not have any impact on tax clearances that have already been issued.

For any assistance with AIT applications, or any queries relating to the process, please contact Kirsten on: kirsten@resolutewealth.co.za