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Bitter-sweet changes to the financial emigration process

Updated: Oct 21, 2021

Well, a few weeks into the new South African financial emigration dispensation and we are starting to see some light at the end of the tunnel.

According to the SA Reserve Bank website “The concept of emigration as recognised by the Financial Surveillance Department has now been phased out with effect from 2021-03-01.” Accordingly, “the Form MP 336(b) has been withdrawn with effect from 2021-03-01.”

The net effect of the change (effective 1 March 2021) is that the SARB is no longer involved in the process and it’s all over to the S A Revenue Services to control.

For emigrants that comes with good and bad news.

The good news is that the process is faster as we now don’t have to work through a commercial bank and the SARB.

The bad news is that SARS have a greatly increased focus on the “Exit Tax” collection so folk that have emigrated and haven’t been terribly good with their previous tax returns will probably be in for a hard time.

Given that SARS is also on a “brain hiring” spree, I think it’s a fairly safe guess to say that the SARS Foreign Employment Team will be bolstered by some fairly smart people whose primary goal will be to make sure the SARS gets every cent of what’s owed to them and then a bit more if possible!

The new emigration process now revolves totally around the Tax Clearance process. The SARB and commercial banks have been removed from the process and the SARS are wanting more documentation before one is “approved” as a tax emigrant.

The starting point is proof that you are getting taxed somewhere else. This definitely has its challenges, especially if you want to get your tax emigration completed before you leave SA. Realistically, I think that is going to prove to be close to impossible as a number of the documents you would need to truly prove your change in residential status are generally only available after you get to your new country.

Once you’ve jumped the “new tax residence” hurdle SARS want a 3 year statement of your worldwide assets and liabilities. Against this you will need to provide evidence of the values you have used on your emigration date and of the original cost of those assets that have a capital growth.

All of that builds up to the calculation of, what is colloquially known as, “Exit Tax”. More accurately, it’s the Capital Gains Tax that needs to be paid when you leave. Click here for more information on that.

Then, once all of that has been audited by the SARS, they will give you a TCS PIN. This is the most important document to your financial emigration because your commercial bank needs that in order to process your requests to send money and other assets to your new home.

We are in the happy position of having lived through the last 30 years of changes at SARS so we are well positioned to help with the TCS applications. Remembering that if the SARS reject your application you have to start all over again, it makes sense to get it right the first time. So, give us a call on +44 2045 242 850 or pop an enquiry off to us and we will gladly assist you (and generally for considerably less than a number of our peers)

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