Emigration withdrawal changes in the directive application process

In line with the phasing out of the old “exchange control” emigration regime that was administered by the South African Reserve Bank (“SARB”) and the new process put in place by SARS, amendments have been made to the Tax Directive guides in respect of persons who wish to make a withdrawal from their retirement fund because of their emigration from South Africa.

There was a window period between 1 March 2021 to 1 March 2022 in which the old exchange control process was still recognised as being evidence of an emigration before the new withdrawal rules were implemented.

Where a person formalised their emigration in terms of the SARB emigration process, receiving a stamped MP336(b) form from their Authorised Dealer before 28 February 2021,  they would be able to withdraw from the funds in full if they provided the fund with signed approval of their emigration from the SARB before 1 March 2022.

If no emigration application was submitted to the SARB in terms of the old rules, after 1 March 2021 in order for a person to make a full withdrawal from their fund, they only needed to provide evidence that they had ceased to be a non-resident for tax purposes for at least three consecutive years of assessment.

The SARS external guide provides the following additional requirements in respect of the completion of a tax directive application:

When dealing with a tax directive application in respect of an emigration withdrawal, the taxpayer needs to submit:

• A letter from the Authorised dealer to confirm that the emigration was recognised by the South African Reserve Bank for purposes of exchange control.
  • For a tax directive application with a date of accrual after 1 March 2022, if the date on the letter is after 1 March 2022 the application will be rejected.
  • If the letter from the Authorised dealer does not indicate it recognised the emigration, the application will also be rejected.
• A copy of the Tax Compliance Status (TCS) or an affidavit indicating when the TCC was issued by SARS and the reasons why the TCC cannot be provided.
  • Where the taxpayer has a taxpayer reference number (TRN), the TCC / TCS must be in the name of the taxpayer.
  • For tax directive application with a date of accrual after 1 March 2022, a copy of the MP336(b) form must also be attached. If the MP336(b) form is not stamped and signed by SARB before 1 March 2022, the application will be rejected
• Where TCS pin confirming the emigration cannot be submitted an affidavit can be provided which should indicate when the TCC was issued by SARS and the reason why the TCC cannot be provided.

The taxpayer must have an active income tax reference number before a directive can be submitted and should have updated their change in tax residency status on SARS RAV01 on e-filing.

If a second directive is applied for, to prevent a ‘duplicate application’ error on the second tax directive application, the original date of accrual must be increased by one day or reduced by one day but must still be in the same year of assessment.

Find a copy of the updated SARS guide on how to complete directive forms here.

The SARS external guide titled “Tax Directive: Emigration, Cease to be resident and expiry of Visas” has been updated with an additional requirement for an “emigration withdrawal” tax directive application:

Based on the updated guide, the application Form C and Form B must be completed on e-filing and the supporting documentation must include:

• A letter from the Authorised dealer to confirm that the emigration was recognised by SARB for purposes of exchange control;
  • The date on the letter must be before 1 March 2022.
• A copy of the Tax Clearance Certificate (TCC) in respect of emigrations issued by SARS; or
• A copy of the ‘Tax Compliance Status - Pin issued’; or
• An affidavit indicating the reason a TCC issued by SARS cannot be provided.
• A copy of the stamped and signed MP336(b) by an Authorised dealer / SARB, the date of which must be before 1 March 2021; and
• The member’s certificate of residence obtained from the relevant Tax Authority of the country in which the member resides.

The application (in respect of a taxpayer’s emigration) will be rejected by SARS in the following additional circumstances in terms of the updated guide:

• Where the taxpayer has not informed SARS that they have ceased to be a resident.  The RAV01 can be completed on eFiling or by making an appointment with a virtual agent through eBooking on SARS website.
• If a copy of the MP336(b) is not provided and / or the date stamp on the MP336(b) is after 1 March 2021.
• The letter from the Authorised dealers does not indicate the emigration is recognised for purposes of the exchange control and / or the date on the letter is after 1 March 2022.
• The tax reference number is not active on the SARS system. If the taxpayer is not registered or no TRN is on the SARS system because the taxpayer left the country before 2000 and the TRN was deactivated, the tax directive application form can be submitted without a TRN.
• The visa has not yet expired.

Find a copy of the updated SARS guide on how to complete directive forms here.

22/08/2022