South African taxpayers require a non-resident confirmation letter to confirm that they are no longer required to pay tax when they leave the country permanently – but it is becoming common for the South African Revenue Service (SARS) not to issue this letter, according to Businesstech.

The non-resident confirmation letter formally confirms that the person is non-resident for tax purposes. SARS runs a system to make sure that they relinquish their worldwide taxing right, as this is not something a revenue authority wants to do.

Tax Consulting SA is quoted as saying: ‘We are increasingly approached by taxpayers, or their advisors, where a Non-Resident Confirmation Letter has been rejected. To date, we have not seen a SARS rejection for this letter that has been incorrectly issued.

‘The reason for these rejections is normally because the process originally followed to break tax residency with SARS was flawed or, in many cases, no formal process was followed.’

To be able to apply for the confirmation letter, one must already have completed emigration forms (ceasing of tax residency) through the formal SARS process, Tax Consulting SA said.

‘Just like any other legal application, this process has specific requirements and, typical to SARS, these must be met beyond doubt for the letter to be granted. Keeping in mind that the issuing of the non-resident confirmation letter involves a verification of one’s South African tax residency status – SARS requires various supporting documents for this application to be successful.

‘Where the correct process is not followed, the SARS Confirmation Letter will not be issued.

‘A rejection is usually based on a lack of documents and information presented to SARS in support of the application, or if one has not yet formally ceased one’s tax residency.’