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Income Tax Matters for South African Expats

South African citizens living abroad should be mindful of which country has taxing right and how this may impact their income tax obligations. Tax obligation depends on residency status. Unfortunately, though, there is a common misconception that once expats have physically left the country, they no longer hold any commitments toward SARS – which is not the case.

This belief can land many taxpayers into unwanted territory, as SARS has to be informed of any changes to tax status. To declare a change from resident to a non-resident, expats must acquire a SARS non-residency tax status confirmation letter.

Understanding Tax Residency

Citizenship and tax residency are not automatically aligned, meaning expats must update their tax status should they leave the country. The residency-based tax regime was first introduced in 2001 and outlines that South African tax residents are obligated for tax on their worldwide income. This does not impact South African citizenship but rather ensures that you are not taxed in the country due to living abroad (no longer a physical resident). Similarly, non-South African citizens with tax residency are taxed differently – only on their South African income.

Confirmation of Non-residency

Expats who have left South Africa, and intend to stay abroad indefinitely, must apply for non-resident Tax Status Confirmation. Expats applying for this change can backdate their application to ensure its factuality in the date they initially emigrated. This letter can only be applied for after the tax emigration process has been completed with SARS.

Why has my application for Tax Status Confirmation been rejected?

The expat taxpayer did not correctly indicate a tax residency change.
The change was updated and deleted and requires reapplication.
The expat taxpayer emigrated before the residency-based tax regime implementation.

What can I do?

Resubmit the application to confirm the status of tax residency.
Contact SARS formally to enquire about remedying the situation.

Non-residents must legally declare their change in status to SARS. Without doing so, expats remain South African tax residents which will result in being taxed on worldwide income, regardless of the source.

At MMS Group, we understand the complexities of income tax. Should you require assistance with your tax residency status, please reach out to our team.