THE NEW FINANCIAL EMIGRATION

CONFIRMED PROCESS TO CEASE TAX RESIDENCY

Financial emigration is the process used by many South Africans abroad to formalise their non-resident tax status for both tax and exchange control purposes.

The process has been extremely successful for South Africans to cut tax ties, and as such, SARS has made it more difficult to cease tax residency by amending the process effective 1 March 2021.

We have an in-depth understanding of the new process and can help you complete your Financial Emigration and guarantee non-tax residency through SARS. This will provide you with protection from #ExpatTax2021 and ensure your foreign earned income remains tax-exempt in South Africa.

Engage Now What is the new process?

FINANCIAL EMIGRATION SOUTH AFRICA 2021

Financial emigration from South Africa has changed from 1 March 2021. The old financial emigration process has been replaced with a new regime that comes a host of positives and negatives. A positive being the antiquated legislation around exchange control for the process is completely falling away, however, on the other hand, the tax treatment of the process will be more stringent with a focus on tax residency only, potentially making it more onerous to overcome the burden of proving non-resident status.

THE NEW FINANCIAL EMIGRATION PROCESS WILL INCLUDE INTER ALIA
A focus from SARS specifically on tax residency in terms of the South African tax residency tests;
The application for the Notice of Non-Resident Tax Status Letter from SARS;
An “exit tax” calculation on worldwide assets, in terms of section 9H of the Income Tax Act;
A stringent audit by the SARS auditors and potentially by the dedicated SARS Foreign Employment team; and
Approval by SARS before any funds may be expatriated by an authorised dealer based on emigration.

FALLING AWAY FROM THE FINANCIAL EMIGRATION PROCESS
SARB MP336(b) form and application;
The application for an Emigration Tax Clearance Certificate, with supporting documents to prove non-resident status;
Requirement for an authorised dealer to attest the application;
Requirement of SARB approval before conclusion of the application; and
Archaic restrictions on bank accounts after they have been converted into non-resident accounts.

FREE EMIGRATION ASSESSMENT HOW WILL SARS FIND ME

SARS EXPATRIATE AUDITS

Since the hotly debated amendment to Section 10(1)(o)(ii) or ‘Expatriate Exemption’ took effect from 1 March 2020, with the questions on many expatriates’ minds often being ‘how will SARS find me? What does the SARS audit of an expatriate look like and what questions should I expect?’

Anyone who has been sharply following the SARS expatriate tax law change will know that expatriates are being earmarked for aggressive targeting.

They would also know SARS started a dedicated ‘Foreign Employment’ unit to execute on this mandate, but what happens when you are on their radar and the audit commences?

THE EVIDENCE

On an audit request dated 02 November 2020 from SARS, the following questions/requests were posed to the expatriate filing the return:

Submit 12 months bank statement with all income and a description which reconciles with what was declared to SARS.

Submit a copy of the tax clearance application and approval for emigration.

Submit a copy of your residency certificate.

On the unsold property in South Africa, what is the intention of holding this property?

Date of departure from OR Tambo airport.

The questions speak for themselves and will be a reality check for those who have been putting off dealing with their tax obligations decisively, or who followed the ‘quick and easy’ solutions, which leave room for maximum risk and little protection in the long run.

Unfortunately, expatriates were forewarned on being compliant, and with SARS’ recent inclusion of the words ‘wilfully or negligently’ in the Tax Administration Act, one cannot take these questions lightly when responding nor plead ignorance after the fact; the consequence of which include imprisonment or a hefty fine. Click here to view the SARS audit request mentioned above.

I NEED TO FINANCIALLY EMIGRATE OUR CREDENTIALS

WHY US FOR FINANCIAL EMIGRATION?

Financial Emigration is part of a group of companies which has been in existence for 17 years and are widely acknowledged as the market leaders in Expatriate Tax. The group was entrusted by Barry Pretorius and South African expats worldwide to represent the Expatriate Petition Group (“EPG”) in parliament to fight the law change, which resulted in the R1.25mil exemption, and also authored the LexisNexis’ first of its kind Expatriate Tax textbook released late year.

Our multidisciplinary team of more than 130 professionals including Tax Attorneys, Tax Practitioners, Chartered Accountants (SA) and Emigration specialists, will take over the entire FE application process on your behalf. This gives you peace of mind that the administratively burdensome and somewhat complex process is handled end-to-end, where we deal both with SARS and SARB, ensuring full compliance with all legislation.

When your Financial Emigration is successfully completed through our company, we guarantee non-tax residency on record with SARS.

START OUR FREE FINANCIAL EMIGRATION ASSESSMENT

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Is your GROSS income above the R1.25 million expatriate tax exemption cap?*
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THE NEW FINANCIAL EMIGRATION

FINANCIAL EMIGRATION SOUTH AFRICA 2021

THE NEW FINANCIAL EMIGRATION PROCESS WILL INCLUDE INTER ALIA