Chrispos Seete | SARS Compliance Specialist | Tax Consulting SA | mail me |
South African law requires any person who becomes liable for tax, whether income tax, VAT, or Capital Gains Tax, to register as a taxpayer with the South African Revenue Service (SARS). You must obtain a tax number. This unique identifier, issued by SARS, tracks and manages your tax obligations and compliance.
This requirement applies to South African residents and foreigners who do business in South Africa. There is no getting around it. Without a tax number, your ability to work, invest, run a business, or access financial services in South Africa is limited. A tax number is more than a number. It is your key to participating fully in the country’s financial and economic ecosystem.
Common challenges for foreign individuals
For foreign individuals, obtaining a tax number is often one of the earliest administrative steps after sorting out immigration or travel documents. However, with SARS discouraging walk-ins and shifting to digital and appointment-based processes, this step can become complicated and time-consuming. This is one of the major hurdles foreign individuals face when entering the South African tax system.
SA contact details matter
A major obstacle is that SARS does not accept foreign contact details during tax number registration. Consequently, many foreign nationals without South African contact details cannot complete the registration process independently while still abroad. This requirement is one of the practical hurdles foreign individuals face during early-stage compliance.
To save time and avoid frustration, many individuals turn to online sources and AI tools for assistance. However, they are better off engaging a tax specialist with experience in this field.
eFiling and tax registration are not the same
Another misconception arises when individuals believe they are registered for a tax number. Later, a tax expert discovers they have only created an eFiling profile with no tax number linked to it. This leaves them unable to demonstrate compliance or access essential services.
One Person, one tax number rule
Under Section 20(1) of the Tax Administration Act (TAA), every taxpayer may have only one tax number. This rule can become a common pitfall for South African expats.
After years abroad, many assume they no longer have a tax number if they were inactive on SARS platforms. They are unaware that the first tax number, linked to their South African ID, remains the only tax number needed. However, many inadvertently register a new tax number using passport details. This duplication can create issues that are not easily fixed without familiarity with SARS systems.
The correct approach is to reactivate and correctly link the existing tax number through SARS-approved procedures. Professionals should handle this process. These administrative complexities represent additional hurdles foreign individuals face when returning to the South African tax system.
Inactive, deregistered, or incorrectly linked tax numbers
Often, the challenge is not that a tax number does not exist. Instead, the problem lies in its status or visibility:
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Inactive tax numbers
These usually result from individuals, foreign or South African, not submitting returns for several years. This may occur due to unemployment, relocation abroad, or economic inactivity.
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Deregistered tax numbers
SARS may deregister the tax number when a taxpayer shows no activity for an extended period.
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Incorrectly linked on SARS systems
A tax number may exist, but may not be linked correctly on an individual’s eFiling profile.
Due to these challenges, many individuals find themselves in administrative limbo. They cannot register, retrieve, or access their Notice of Registration.
Where these issues commonly arise for SA expats and foreign individuals wishing to:
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Access inheritance held in South Africa
For example, someone who left the country at a young age to study abroad and now requires a tax number to release or administer an inheritance.
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Encash insurance policies or investments
Individuals who previously worked in South Africa and now need to encash matured policies or investments for transfer abroad.
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Invest in the South African economy
This includes investing in a local business, acquiring shares, or contributing to investment funds.
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Purchase property
Foreigners buying a holiday home or rental property in Cape Town or Durban must register for tax before transfer. SARS requires registration to ensure that transfer duty is processed correctly.
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Take up employment in South Africa
Anyone relocating to the country for work must obtain a tax number before commencing employment.
How to get it right – what effective compliance requires
Proper tax registration, especially for foreign individuals and South African expats, requires more than submitting documents.
The process often involves:
- Gathering required supporting documentation, including ID or passport details.
- Conducting checks to identify any existing SARS linkages and ensuring the correct tax number is reactivated if it exists.
- Facilitating communication with SARS to ensure accurate and efficient registration.
With the right guidance and understanding of SARS requirements and procedures, navigating the tax number process does not have to be stressful. Experienced tax practitioners can remove complexity, ensure correct registration, and link your tax number properly.
Do not let tax registration hurdles hold you back. Let us help you unlock your full potential in South Africa.
