For South Africans currently living or working abroad the time has come that they can no longer avoid the SA Revenue Service (SARS). As stricter legislation settles and a system of global financial data emerges, SARS is now able to detect taxpayers who may have previously slipped under their radar.

It is strongly advised that South Africans looking to relocate should follow all the formal exit procedures and ensure that their income tax affairs are in order. It is important for expatriates to have themselves noted as non-residents for tax purposes.

Whether or not a South African living abroad must declare their current income and be taxed on it is not determined by their location or amount of time outside of the country, but rather their tax residency status. Unfortunately for those who believe they are free from tax obligations once they have left the country, it is not so.

Where it began

The changes to the expatriate tax laws for South Africans came into effect on 1 March 2020, shortly after SARS launched their Foreign Employment Unit. It was also announced that the Financial Emigration law, which was previously responsible for confirming one’s non-resident status, would be amended.

The term “wilfully” was also removed from the Tax Administration act, which dealt with non-compliance, giving SARS greater leverage for prosecution against those ignoring their tax obligations.

The strategy

It has been advised that SARS has adopted a “two-pronged attack strategy” method. Firstly, expatriates are called on to prove their non-residency and justify their intentions. In some cases, proof of an Emigration Tax Clearance Certificate is also required. Secondly, SARS has begun to utilize the common reporting standard to conduct audits on offshore income.

The current options

Not all hope is lost with these amendments. South African Expatriates as well as those wishing to emigrate are urged to apply for financial emigration before March 2021, as these applications will be processed under the current legislation.

Individuals can also take advantage of available double tax agreements between South Africa and their country of employment.

In the event that an expatriate is not tax compliant, they can approach SARS under the Voluntary Disclosure Programme to formalize payment of income taxes outstanding, including relevant interest and penalties, to avoid prosecution.

At MMS Group, we assist emigrating South Africa citizens with the preparation of SARB form Mp336b. This form deals with tax residency change, submission of tax for cessation of residency and application for emigration clearance. We serve through this administrative process, to confirm all assets held in South Africa that will come under the control of SARB. Should you require assistance in regulating your expat income tax affairs or with the financial emigration process, feel free to contact any of our tax consultants.