We’ve spoken at length about tax residency and tax compliance before, but there’s one aspect of tax compliance that is perhaps most pivotal for South Africans who want to move abroad - visas.
Let’s take a look at the link between tax compliance and visa vetting.
Proving tax compliance for visas
We already noted in previous articles that SARS requires residency permits in order to determine tax residency and tax compliance. For those who want to cease tax residency in SA, proof of their foreign tax residence must also be issued by the applicable revenue authority abroad.
While this may seem complicated, it can actually be a rather straightforward process as most countries will necessarily require new immigrants to obtain income tax numbers locally in order to work there. The application usually differs from the process followed by permanent residents or citizens of a territory.
Immigration and Revenue services work hand-in-hand
Foreign workers who wish to register for tax in South Africa can either register for tax via their employer, auto-register on eFiling to obtain their IT150 and provide their Passport number or Asylum seeker number or visit the SARS offices with all their requisite documentation.
While SARS doesn’t work directly with the Departments of Home Affairs and Foreign Affairs to automatically vet individuals, visas are verified to confirm that an individual is allowed to live and work in the country.
Some examples of tax and immigration overlap
Since most readers won’t necessarily be interested in how the process works in SA, we’ll go over some examples of how taxes and immigration/visa services overlap.
New Zealand - new arrival IRD number
Revenue and immigration services are far more closely linked in other countries, however in New Zealand, for instance, the final date of arrival in New Zealand as stipulated on one’s visa is also the date on which you’re to apply for an IRD number. In order to fast-track the process, individuals applying for an IRD number as ‘new arrivals’ can link their applications to Immigration New Zealand to allow for automatic vetting of information. Those who don’t complete the process immediately will need to apply for an IRD number as ‘living in New Zealand and not a new arrival’, which could cause problems in retaining their visas.
European Union - copyright restrictions on TIN info
Most countries in the European Union make use of Tax Identification Numbers (TINs) to identify taxpayers throughout the Union and to facilitate ease of administration across borders. Yet TINs aren’t necessarily a requirement or treated the same throughout the region and foreigners may get a bit confused when working in different countries.
While we would like to share information about the divergent TINs for different EU nations, there’s a catch - some nations have strict copyright restrictions on any and all information pertaining to tax and personal identification either published on their own or the EU TIN portal. This legislation is so strict in certain regards that even citing the copyright restrictions themselves can be deemed a breach.
That said, TINs, personal identification, and visas go hand-in-hand in the EU.
United Kingdom - HMRC issued TINs
His Majesty’s Revenue and Customs issues two types of TINs - the unique taxpayer number (UTR), and the National Insurance Number (NINO). While UTRs are generally only issued to those who need to submit tax returns as a rule, NINOs are issued to any individuals who regularly live in the UK. In addition to this, immigrants may also receive a PAYE Temporary reference number (TRN) which is generated when a NINO can’t be traced.
USA - ITIN based on visa status
While foreign ‘visitors’ to the USA can obtain IRS Individual Taxpayer Identification Numbers (ITINs) in order to process payments in the U.S., this is generally restricted to individuals who are
If you’re a foreign ‘visitor’ to the USA who cannot apply for a Social Security Number (SSN) due to your visa status (the B1/B2 or WB/WT visas, for example), you should apply for an IRS Individual Taxpayer Identification Number (ITIN). No payments will be processed for such individuals without an ITIN.
Obtaining an ITIN starts with the completion of a W-7 Form from the GLACIER Nonresident Tax Compliance System which must be submitted to the IRS with an original or certified notarised copy of an unexpired passport.
In lieu of a passport, the IRS will accept a combination of notarised copies of two or more documents that can confirm the individual’s identity.
The burden of responsibility doesn’t fall on the individual alone, as U.S. employers are required to verify employee eligibility and submit all necessary documentation before such individuals are permitted to live and work in the U.S.
Proof of financial stability
Visa vetting relies on tax compliance for a very simple reason: it’s the easiest way to determine whether a visitor, worker, or prospective resident is a responsible person.
Tax statements aren’t considered in isolation, however, as many countries also require additional vetting such as proof of clear credit records - or commitment to remedying poor credit at the very least.
Travel and temporary stay visas are generally only issued if prospective visitors can prove that they have sufficient funds to sustain their travels as well as exit from the country in question. It therefore makes sense that vetting for work, study, and long-stay visas is even more critical, intensive, and extensive.
Rand Rescue can help you out
Rand Rescue has assisted thousands of expats across world regions with their cross-border finances. Since financial transactions don’t work in isolation, we’re also aware of all the intricacies of visas, permits, and citizenship which inform or require tax compliance and adherence to local regulatory instructions.
The information provided in this article and on this website is intended for general informational purposes only. It is not a substitute for professional advice, whether financial, legal, or otherwise. Before making any decisions or taking any actions based on the information provided on this site, we strongly recommend consulting with qualified professionals who can assess your specific circumstances and provide tailored guidance.