South Africa’s financial immigration system has changed – here are the new rules

The Treasury has stated in its 2021 national budget that amended rules on financial immigration will come into effect on March 1, 2021.

Financial immigration is a process used by many South Africans abroad to formalize their non-resident status for both tax and currency control purposes.

“Since the first announcement, there have been no public consultations, draft rules, or other public announcements about what the new process will look like,” said Jonty Leon, Legal Manager at Tax Consulting South Africa. I am.

“But finally, the South African Reserve Bank (SARB) has announced comments to authorized dealers on how the new regime will begin.”

New rules

According to Leon, the new regime has many positive and negative changes.

“The positive thing is that the obsolete legislation on process currency control has been completely abolished.

“But on the other hand, the tax treatment of the process can be more rigorous by focusing solely on the resident, and overcoming the burden of proving the status of non-residents can be more cumbersome. “

The following is drop out From the financial immigration process:

  • SARB MP336 (b) forms and applications.
  • Requirements for authorized dealers to certify the application.
  • SARB approval requirements before the application is completed.And
  • Old-fashioned restrictions on bank accounts after being converted to non-resident accounts.

The· New financial immigration process Included:

  • From the perspective of South African tax resident testing, SARS focuses specifically on tax resident.
  • Applying for an immigration tax clearance certificate, including supplementary documents to prove the status of non-residents.
  • Calculation of “exit tax” on world assets under Section 9H of the Income Tax Act.
  • Strict audits by SARS auditors and, in some cases, by a dedicated SARS foreign employment team.And
  • Approval by SARS before funds are deported by immigrant-licensed dealers.

Tax residence

Leon said tax residence in South Africa is determined by two tests: “physical presence” and “regular resident”.

“Many people think that they are not currently living in South Africa and are not SA tax residents. This is oversimplified and many have suffered from SARS in the past. It was.

“All aspects of both tests need to be carefully considered, individually with the taxpayer, and a balance of probabilities to determine if the liability to prove non-resident can be overcome.”

Leon said South Africans need to be careful when making this declaration to SARS in a hurry if this is not true or cannot be proved by objective evidence.

Even recent mistakes can land in hot water, especially after amendments to tax administration laws that have removed the term “intentionally” when dealing with violations.

“This amendment has given SARS greater influence in handing over taxpayers for prosecution in the event of negligence or allegations of negligence.”

read: How Much Money Can You Expect to Make in South Africa’s Financial and Banking Roles?

South Africa’s financial immigration system has changed – here are the new rules

Source link South Africa’s financial immigration system has changed – here are the new rules

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