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Changes to Formal emigration

FINANCIAL emigration SERVICES from south africa


What is formal emigration?

Many South Africans have emigrated without formal emigration from South Africa.

Formal emigration is the process to close your financial affairs when leaving South Africa immigrating to another country – and changing your status-for exchange control purposes from resident to non-resident. Emigration does not affect your citizenship or the right to retain your South African passport. There may be many advantages of arranging this formal emigration:

  • Should there be a potential inheritance, this can be remitted only if the beneficiaries have formally emigrated.
  • If there are any insurance policies or retirement annuities, these can be made paid up and proceeds can be remitted.  They can be paid out even if retirement age is not reached.
  • Closing the door on all tax and exchange control issues in South Africa
  • If you formally emigrate, your non-South African assets are no longer subject to Estate duty in South Africa.
  • Passive income i.e. rent, dividends, director`s fees, salary for services rendered in South Africa and income from trusts can be formally remitted.

We can assist in arranging all aspects of formal emigration.

Employment overseas

and still living in South Africa

Many skilled South Africans have accepted employment opportunities in foreign countries on contract for lengthy periods such as for most of the year or even for several years continuously, and so legally avoided paying tax in South Africa. SARS has treated these people as “non SA resident for tax purposes” South Africa adopted a “residency-based” income-tax system on 1st March 2001 and this basically means that a person pays income tax in the country where they live and work for most of the year. If a SA citizen lives and works in a foreign country with a DTA (Double Tax Agreement), such as the UK for example, for most of the year then they should be treated as a UK taxpayer and pay income tax in the UK.

This also means that if they spend most of the year living and working in a country where there is no income tax, such as Dubai for example, then they pay no income tax in Dubai and no tax in South Africa, so they pay no income tax at all.

SARS has now changed the tax laws in SA (Taxation Laws Amendment Bill Dec 2017) and SA citizens working overseas will now pay income tax on a portion of their offshore earnings to SARS. The law will come into effect on 1st March 2020.

If there is DTA ( Double Tax Agreement) in place, the first R1m of salary/income earned offshore will be exempt from tax and SARS`s normal tax rates will apply to the balance of income earned. This means that, if a person earns R1, 100,000 in foreign salary/income then the first R1m will be exempt from tax in South Africa and SARS will tax them on the R100, 000 balances.

Were tax is deducted; they will be used as a credit towards South African tax liability.
Many people working in foreign countries enjoy fringe benefits such as accommodation, the occasional free flights home etc., as part of their contracts, and SARS sees all these benefits as part of taxable foreign earnings. If a South African citizen works in Dubai for a year and earns R2m then no income tax is deducted in Dubai. SARS will exempt R1m of the income and SARS will income-tax on the R1m balance of the foreign income earned. The only current way to avoid this situation is for the taxpayer to emigrate from South Africa.

Formal Emigration Requirements

To formally emigrate, if there are assets in South Africa, it is necessary to get a tax clearance and…

Emigration Checklist

Requirements when applying for emigration
Click “LEARN MORE” to see the full list…

Voluntary Disclosure Programs

For South African tax payers who have not previously formalized their foreign assets, it…