South Africa has experienced a major brain drain in the last few years and many skilled South Africans have migrated. However, leaving South Africa does not mean that you can forget your relationship with the South African Revenue Service (SARS), says Tax Consulting South Africa.
“No matter where you decide to live, unless you have a formal tax-exempt place of residence, you are obliged to report your worldwide income to SARS and pay taxes each year,” said Reabetswe Moloi, a recognized lawyer. Says. At Financial Emigration, a division of South African tax consulting.
In addition, paying taxes to foreign governments does not mean that you do not have to settle SARS invoices. Therefore, double taxation can occur.
“But depending on the situation, if you act immediately, you can reduce the tax burden or eliminate it altogether,” Moroi said.
take it easy
Most South African immigrants move to a new country, dreaming of building permanent roots, with little thought of returning to South Africa one day. They generally have a more complex portfolio of wealth, investment, and life responsibilities than young adults. In most cases, they want to maintain wealth to ensure a stable and safe future for their families.
The last thing they need is a surprise audit letter from SARS requesting an explanation of their assets and income. Especially if they come a few years after they settle down.
It may seem easy to put it in a bottle and forget about it. But as SARS advances more technologically and integrates into a global system of information sharing, it’s only a matter of time before an email letter knocks on your door.
“It is inevitably much better to tidy up your home before the day comes,” Moroi said.
What you can do
Immigrants have several options. These vary greatly depending on their intentions and their ability to prove it, whether they mean leaving South Africa forever or finally returning home.
“Don’t try to fool SARS or your expatriate tax accountant about this, as you can see if the real intention left evidence and abused these provisions,” Moroi warned.
The first option is that by law, the first R1.25 million of expatriate’s annual income is exempt from taxation if employed. Independent contractors and consultants, as well as those who earn income from assets such as rental properties and overseas investments, are not eligible for this exemption.
However, in order to apply for an exemption and benefit from it, it is important to file a tax return for the year in which the issue is assessed.
Second, only one government can be eligible to pay taxes if the destination country has a double taxation agreement with South Africa. It’s a good idea to check this before you move.
The third option is to formalize the status of tax-exempt residents by financial immigrants. This allows taxpayers to completely reduce their tax burden on SARS. This is the most desirable route for anyone who intends to stay forever outside South Africa.
However, the process is very complex and must be carefully managed to succeed.
You need the help of a tax expert who specializes in expatriate tax to know the best option for your situation and how to navigate each path correctly.
They should also be backed by a strong legal component: lawyers and tax professionals who are familiar with complex tax laws. “Having good legal and technical advice on your part gives you an edge when dealing with SARS,” Moroi said.
SARS monitors South African brain drain
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