THE NEW FINANCIAL EMIGRATION

CONFIRMED PROCESS TO CEASE TAX RESIDENCY

Financial emigration is the formal process that allows South African expatriates to cease their tax residency and gain recognition as non-residents for both South African tax and exchange control purposes.

This method has proven effective for South Africans living abroad to break tax ties with SARS (South African Revenue Service). However, as of 1 March 2021, SARS has introduced stricter requirements to complete the tax emigration process, making it more complex to formally cease tax residency.

Engage Now What is the new process?

Our team specialises in the new Financial Emigration process and offers full support to ensure you meet SARS’ updated compliance standards. We assist you in obtaining official non-resident tax confirmation through SARS, giving you:

– Protection from the #ExpatTax2021 changes.

– Legal non-tax residency status in South Africa.

– Exemption from tax on foreign-earned income.

Let us help you secure your non-resident tax status and preserve your international income from unnecessary South African taxation.

FINANCIAL EMIGRATION SOUTH AFRICA 2021

Effective 1 March 2021, financial emigration from South Africa transitioned to a new process that removes outdated exchange control rules but imposes stricter tax requirements. The updated regime focuses solely on ceasing tax residency, making it more challenging for South Africans abroad to prove non-resident status to SARS. While the removal of exchange control is a positive development, the process now requires a more rigorous assessment of tax residency, increasing the burden of compliance for those seeking formal non-residency.

The new financial emigration process introduced by SARS places a strong emphasis on determining South African tax residency. The updated procedure includes several key requirements and compliance steps.

THE NEW FINANCIAL EMIGRATION PROCESS WILL INCLUDE INTER ALIA
A detailed evaluation of tax residency status under South African tax residency tests;
Submission of an application to SARS for a Notice of Non-Resident Tax Status Letter;
An exit tax calculation on global assets, as required under section 9H of the Income Tax Act;
A possible comprehensive audit by SARS, including review by the Foreign Employment Unit;
SARS approval is mandatory before any funds can be legally expatriated via an authorised dealer on the basis of emigration.

The old financial emigration process has been replaced, and several outdated requirements have now fallen away, simplifying compliance for South Africans abroad. The following elements are no longer applicable under the new regime:

KEY ELEMENTS REMOVED FROM THE OLD FINANCIAL EMIGRATION PROCESS
Completion and submission of the SARB MP336(b) form;
Application for an Emigration Tax Clearance Certificate, including documentation to prove non-resident status;
Mandatory attestation by an authorised dealer (typically a commercial bank);
South African Reserve Bank (SARB) approval required before finalising emigration;
Archaic restrictions on non-resident bank accounts, including limited transaction functionality.
The removal of these steps reflects the shift away from exchange control processes toward a streamlined focus on tax residency compliance with SARS

.

FREE EMIGRATION ASSESSMENT HOW WILL SARS FIND ME

SARS EXPATRIATE AUDITS

Since the Section 10(1)(o)(ii) Expatriate Exemption changed on 1 March 2020, many South Africans abroad are asking, “How will SARS find me?” and “What happens during a SARS audit?”

SARS has launched a Foreign Employment Unit to focus on expatriates, with increased audits targeting foreign income and residency status. If you’re flagged, expect a detailed review of your tax residency, employment, and global income disclosures. Preparation is key to proving your non-resident tax status and avoiding penalties.

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 audit questions from SARS serve as a stark warning for South African expatriates who have delayed resolving their tax obligations or relied on short-cut solutions that offer high risk and little protection.

Expatriates were repeatedly advised to remain tax compliant, and with SARS now including the terms “wilfully or negligently” in the Tax Administration Act, the stakes are higher than ever. Responses to SARS must be accurate and well considered ignorance is not a defence. Non-compliance can lead to hefty fines or even imprisonment. Click here to view the SARS audit request.

I NEED TO FINANCIALLY EMIGRATE OUR CREDENTIALS

WHY US FOR FINANCIAL EMIGRATION?

Financial Emigration is part of a leading group of companies with over 17 years of experience and is widely recognised as the market leader in Expatriate Tax services. Trusted by Barry Pretorius and thousands of South African expats globally, the group represented the Expatriate Petition Group (EPG) in Parliament, playing a key role in achieving the R1.25 million foreign income exemption. We also authored LexisNexis’ first-ever Expatriate Tax textbook, a landmark contribution to the industry.

Our multidisciplinary team of over 130 experts, including Tax Attorneys, Chartered Accountants (SA), Tax Practitioners, and Emigration Specialists manages the entire Financial Emigration (FE) process on your behalf. We handle all communication with SARS and SARB, ensuring full legal compliance and eliminating the burden of navigating this complex process yourself.

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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THE NEW FINANCIAL EMIGRATION

FINANCIAL EMIGRATION SOUTH AFRICA 2021