The South African Revenue Service (“Sars”) has kept to their promise of enhancing their tracking abilities to seek out non-compliant taxpayers. These methods include the precise tracking of flights, wealth audits, as well as stringent verifications upon declarations from taxpayers.

Furthermore, taxpayers and tax practitioners alike has seen an increase in penalties for non-submissions and late submissions resulting in reoccurrence penalties which the taxpayers are liable for. The increase in the aforementioned, coupled with the enhance data collection efforts from Sars makes it increasingly harder for non-complaint taxpayers, in South Africa and abroad, to hide from Sars ever growing grasp.

South African expats are not immune to these methods and should practice caution when interacting with Sars, especially in the light of stricter verification, deep diving audits and the enhancement of Sars' third-party data collection methods.

A deep dive into the taxpayers’ factual circumstance

South Africans working or living abroad should be cautious and ensure they are fully compliant with all tax laws and regulations. Sars will enquire into their global financial standing to confirm worldwide income is declared for all tax residents. Congruently, those ceasing their tax residency in South Africa will also be investigated to ensure they qualify to do so. 

These deep dives into the taxpayer's personal situation are a result of Sars' improved data collection methods, where Sars strives to achieve optimal compliance audits.  Sars’ data collection abilities are not limited to information available in South Africa, with initiatives such as the OECD’s Common Reporting Standards (CRS), of which South Africa is a signatory, ensures a global reach and access to financial information. 

The CRS is aimed at improving tax transparency and combatting tax evasion by exchanging information between tax authorities of participating countries. South Africa, and as an extension Sars, form part of this initiative that requires taxpayers to provide accurate and up-to-date information on their personal and financial status to ensure full compliance with the law. 

Tracking of flights

As part of a stricter emigration process, Sars can track a person's flights to ensure that the information aligns with the records provided to them by the taxpayer. Expatriate taxpayers who are awaiting approval for non-resident status may have their flights into and out of South Africa tracked by the tax authority with extreme accuracy.

This is consistent with Sars' proactive implementation of a more rigorous verification and auditing process for tax residency status change applications and will subsequently require the taxpayer to disclose the reasons for these visits to Sars.

The path of least resistance

Expatriates should understand their South African tax obligations when they emigrate and must ensure that they remain compliant moving forward. The notion of just leaving South Africa and “forgetting” about Sars or the idea of “Sars cannot find me abroad" is not recommended and could lead to these individuals landing in hot water, with legal and financial implications.

If you are abroad or intend to leave South Africa in the near future, the prudent approach is to obtain guidance from professionals who specialise in expatriate taxation to ensure compliancy is achieved.

The enhancement of Sars’s data collection methods to track down non-compliant taxpayers should encourage individuals who have been using the ill-advised “head-in-sand” approach when it comes to their tax obligations in South Africa to seek guidance on their situation and the steps required to achieve compliancy. The days of taxpayers playing cat-and-mouse games with the Revenue Authority are over. 

Written by Martin Bezuidenhout, Admitted Attorney and Expatriate Tax: Head Consultant at Tax Consulting SA; and Nikolas Skafidas, Sars Tax Compliance and Process Supervisor at Tax Consulting SA