Updated: Mar 12, 2020
As a South African living outside of the country you should consider your tax options according to your current circumstances and tax responsibilities. With the ongoing changes to the tax law in South Africa, one option is still Financial Emigration. But be sure to familiarise yourself other options available and with the pros and cons of them.
We will always start with conducting a Tax Analysis
This is to establish if, in your current circumstance, you are liable for tax in South Africa.
Pro: by first doing a tax analysis, you might find that you are already exempt from tax and you do not necessarily have to go through Financial Emigration (FE).
Con: In some instances, you might be exempt from paying tax, but you will still have to submit annual tax returns.
Breaking Tax Residency
Another way of looking at your tax responsibility in South Africa, is to consider how many days you are actually in the country. Individuals that are out of the country or have been out of the country for 330 full days are not liable for tax; OR if you have been out of the country for more than 5 consecutive years, you are also exempt. This is called the “5 consecutive years Physical Presence test” (more detailed and specific details apply).
Pro: This is a simple process and you only need to deregister tax number
Pro: It is one of the simpler processes
Con: Individuals might have to submit a few tax returns before non-Tax Residency requirements are met.
This is the process of giving up your Tax Residency in South Africa.
1. You will apply for TCC (tax clearance certificate) from SARS
2. and then Apply for Non-Residency from SARB
Please note that there are ongoing laws and regulations relating to Financial Emigration and based on the February 2020 Budget Speech, it might become more and more difficult to complete. Read this post for more and updates from the budget speech (Feb 2020) here.
Pro: Individuals do not need to declare world-wide income to SARS
Pro: Elements of FE could potentially be affected by Tax law change March 2020 – pending information and confirmation after the Budget Speech in February 2020.
Pro: Individuals can withdraw full RA (retirement annuity) and take funds abroad. This, however, will potentially change in March 2021.
Con: This is a longer process. It takes about 3 months to receive Tax Clearance & SARB approval
Con: Individuals must certain about their decision. If you return to South African within 5 years of application, it will be seen as a failed emigration.
For more information on your current tax responsibilities and options, or if you need help with any of the options above, contact us on firstname.lastname@example.org and we will gladly assist.