THE RUDE AWAKENING – SARS NEW AIT Application: Approval International Transfer 

 On 24 April 2023, with no prior notification, the nation received a rude awakening when SARS implemented the enhanced Approval of International Transfers (AIT) process with immediate effect. This change caused Tsunami waves within the financial services sector and taxpayers alike. 

The introduction of AIT imposed several changes to the Tax Compliance Status (TCS) process, including: 

• • The consolidation of the “Emigration” TCS pin and the “Foreign Investment Allowance” TCS Pin to create the new “Approval for International Transfer” (AIT) TCS Pin; 
• • The removal of the Tender option and the need to choose the Good Standing TCS pin for all other scenarios where a 3rd party wants to verify a taxpayer’s compliance; 
• • The increase in the number of required supporting documents; and 
• • The need to disclose local and foreign assets and liabilities at cost for the last 3 years. 

The AIT process, aimed at streamlining and expediting the approval process, now mandates that taxpayers who wish to authorize fund movements outside of South Africa, valued at more than R1 million (for residents), comply with the AIT application. 

Taxpayers who are formalized as non-residents do not have the same benefits as normal residents in terms of the expatriation of funds. South African tax residents may utilize their discretionary allowance of up to R1m to expatriate funds to foreign bank accounts, but non-residents do not have this luxury. Non-residents can only expatriate up to R1m during the calendar they ceased to be residents as a travel 

allowance and will need to obtain SARS compliance to expatriate funds in subsequent calendar years. 

By extending the scope of the AIT application to include non-residents, SARS aims to ensure comprehensive compliance and oversight of fund transfers. This expansion aligns with SARS’ objective of making compliance easier for taxpayers willing to adhere to their tax obligations, while making non-compliance harder and costlier for those who refuse to comply. 

It is clear that SARS intention is to follow the path of the taxpayers money cross borders. The 3 pillars of SARS strategic approach are as follows: 

1. The source of funds: How was the funds obtained? Where did the funds come from? Was tax paid on income received? 

2. Statement of Assets and Liabilities for both Local and Foreign assets: SARS wants to see the value of assets at cost and market value and align the equity growth year on year in comparison to income and assets declared. 

3. Where are the funds going? : SARS wants to see where you are repatriating to funds to which location, details of investment and banking institution. 

Taxpayers, whether residents or non-residents, will need to navigate the AIT process and provide the necessary information and documentation to receive approval for fund movements exceeding the specified threshold. This extension of requirements underscores SARS’ commitment to maintaining a robust and effective tax system that addresses both domestic and international financial activities. 

The inclusion of residents in the AIT application highlights SARS’ dedication to closing potential loopholes and ensuring that all taxpayers, regardless of their residency status, contribute their fair share to the tax revenue of South Africa. It serves as a reminder that compliance with tax regulations is essential for both residents and non-residents, promoting fairness and equity in the tax system. 

Taxpayers are advised to familiarize themselves with the requirements of the AIT application by firstly reviewing taxpayers tax diagnostic and risk reconciliation prior to considering the AIT process and ensure that they comply with all necessary documentation and disclosures when seeking authorization for fund movements outside of South Africa. Seeking professional assistance from tax advisors or experts can help navigate the complexities of the process and ensure compliance with the extended requirements. 

As SARS continues to enhance its compliance measures and enforce tax regulations, the AIT application represents a significant step towards achieving greater transparency, efficiency, and fairness in the tax system, benefiting both the revenue authority and taxpayers alike. 

Our specialized tax team will assist taxpayers with AIT applications with an extreme care and evaluate all potential risk factors.