South African residents shifting funds offshore are restricted to sending R1 million (the “standard discretionary allowance” – SDA) per calendar 12 months. With tax clearance from SARS, they might ship a further R10 million per 12 months (generally known as the “foreign investment allowance” or FIA). However, tax clearance certificates are presently taking longer than regular, so it’s essential to plan forward if you want to make the most of your foreign investment allowance earlier than the top of the 12 months.
Why are tax clearance certificates taking longer?
SARS has all the time acknowledged that TCCs take up to 21 working days to course of. However, turnaround instances have typically been inside 5 days, particularly since Covid when functions moved solely to an environment friendly on-line system (by means of SARS e-filing).
Now, SARS has suggested tax practitioners that TCCs will take the complete 21 working days (basically a month) to course of, and no follow-up is permitted earlier than that point has handed.
It’s our opinion that tax clearance certificates are taking longer than they’ve earlier than due to a backlog at SARS brought on by a flood of tax emigration functions and an elevated demand for tax clearance certificates as extra South Africans make the most of crypto arbitrage.
Expat South Africans scramble to tax to migrate
In March 2021, new guidelines had been launched that affected how South Africans who’d left the nation may entry and switch their retirement annuities and pensions offshore. Among these modifications was the implementation of a three-year rule that requires South African expats to present that they’ve been tax resident exterior of SA for three years or extra if they need to encash their RAs earlier than retirement age.
ALSO READ: How to encash your RA after leaving South Africa – a step-by-step guide
These modifications additionally led to quite a lot of misinformation being unfold concerning the necessity of all South Africans residing abroad to change their residency standing with SARS. This has resulted in SARS having to create profiles for a whole bunch of people that left the nation a few years in the past and don’t have any property left in South Africa, solely to allow them to record these profiles as non-resident and probably deregister them once more.
If you’re uncertain about whether or not you want to change your tax residency standing with SARS, Sable International’s tax team could be completely happy to verify for you.
Crypto arbitrage leads to extra TCC functions
Crypto arbitrage refers to shopping for crypto forex on abroad exchanges, the place it typically trades at a cheaper price, and promoting it in South Africa at a better worth.
Even although it was practiced earlier than, crypto arbitrage actually took off in South Africa in 2020, when everybody was sitting at residence trying for methods to make money.
An excessive amount of crypto corporations and different service suppliers popped up throughout this time, providing providers that included TCC functions for shoppers who wished to buy crypto over the worth of the R1 million SDA.
What many don’t realise is {that a} separate tax clearance software wants to be made for each quantity over the SDA. That means, for these shoppers, each time they purchased crypto after they’d spent their SDA, a brand new software had to be made.
For instance, for a consumer buying R200,000 value of crypto at a time, the supplier would make up to 50 particular person functions to SARS in a calendar 12 months to make use of the R10 million FIA. Each of these functions and their supporting documentation would want to be reviewed and processed by a advisor at SARS.
ALSO READ: Need to move money offshore? Apply for your tax clearance certificate sooner rather than later
If you extrapolate that throughout the doubtless 1000’s of shoppers in SA which have engaged in an arbitrage service, you may perceive the barrage of functions SARS has been receiving and the backlog this may occasionally have induced.
Unfortunately, in each of those circumstances, the backlog is unlikely to clear any time quickly. So, if you want to make use of your overseas trade allowance within the 2022 calendar 12 months, it’s value beginning the method as quickly as doable to keep away from lacking out.
Sable International’s team of exchange control specialists can take the stress out of the method of making use of for your TCC and sending your funds offshore. Get in contact on +27 (0) 21 657 2153 or saforex@sableinternational.com.