SARS increases enforcement on South Africans living outside the country
By Sue-Ann de Wet
According to a recent article published by BusinessTech, the South African Revenue Service (SARS) has intensified its efforts to enforce tax compliance among South Africans who live outside the country, particularly those who may not realise that they are still regarded as tax residents under South African law.
The BusinessTech article notes that many individuals assume their tax obligations end automatically once they leave South Africa or even after renouncing citizenship. However, SARS treats citizenship and tax residency as separate legal concepts, and leaving the country does not notify SARS or conclude a person’s tax affairs.
Understanding tax residency
SARS applies two primary tests to determine whether a person remains a South African tax resident:
- the ordinary residence test, which considers where a person’s permanent home and centre of life are located, and
- the physical presence test, which looks at the number of days spent in South Africa over a defined period.
Meeting the criteria of either test may result in SARS continuing to regard an individual as a South African tax resident, even if that person lives abroad on a long-term or permanent basis.
Where tax residency has not been formally ended, SARS may require the declaration of worldwide income, regardless of where it was earned.
Why SARS is focusing on this group
SARS has indicated that many individuals only become aware of their ongoing tax status when a financial or administrative event triggers a review. These events commonly include:
- withdrawals from retirement funds,
- offshore transfers of funds,
- applications for tax clearance or exemptions, or
- preparation for a possible return to South Africa.
In such cases, SARS may reassess previous tax years. This can result in additional tax assessments, as well as penalties and interest, if returns were not submitted or obligations were not met.
Leaving South Africa does not automatically end tax obligations
A common misconception is that tax residency ends automatically when a person leaves South Africa permanently. In practice, a formal process is required to change or cease tax residency with SARS.
Without completing this process, individuals may remain recorded as tax residents, even if they have lived abroad for several years.
Key considerations for individuals abroad
SARS has encouraged affected individuals to ensure that their tax records accurately reflect their circumstances. This may involve:
- confirming current tax residency status,
- reviewing financial and personal ties to South Africa, and
- ensuring all required disclosures and submissions are up to date.
In more complex cases, professional tax advice may be necessary to clarify obligations and avoid future disputes.
Conclusion
SARS’s increased enforcement highlights the importance of understanding how tax residency works under South African law. Physical absence from the country does not, on its own, end tax responsibilities.
Ensuring that tax status has been correctly assessed and, where applicable, formally concluded can help prevent unexpected liabilities and administrative complications later.
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