Financially emigrating from South Africa? Here’s why you should consider living in Mauritius…
Following recent changes in the South African Revenue Service’s stance on foreign services tax exemption from offshore salaries, many people are unsure how this could affect them going forward. Let’s explore who could benefit from financial emigration and why Mauritius would be the perfect destination to emigrate to.
The South African Revenue Service (SARS) has indicated that as of 1 March 2020, the existing foreign services exemption from offshore salaries derived from services delivered offshore will be amended. Previously South African residents who worked offshore and met the necessary requirements could potentially pay no tax on their salaries. However, the new amendment means only the first ZAR1 million will be exempt with the balance, including any fringe benefits, deemed taxable.
The prospect of this change has led to a flurry of articles and concerns that it would also impact many of the South Africans who had simply left South Africa to take up residence elsewhere and had not undertaken a so-called financial emigration. In many cases, these concerns are misguided, as South Africa still taxes individuals based only on residence and not citizenship. Therefore, individuals firmly living in the UK, for example, would not be impacted as they are definitively resident in that country.
What is financial emigration and who should consider it?
Financial emigration refers to the process of making a formal application with the South African Reserve Bank (SARB) to become a non-resident of South Africa. Once completed, your status with the SARB changes from a permanent resident, or resident living temporarily abroad, to a non-resident of South Africa for exchange control purposes. You should note that the process is simply an exchange control matter and will not affect your actual South African citizenship. You will always legally be a South African and you can return to South Africa to live and work whenever you wish.
However, for a host of South African citizens, the changes from SARS will have a significant impact on how their offshore income is taxed. Here we see examples such as pilots who work outside of South Africa for most of the year, or construction personnel based in Dubai. Out of interest, the fringe benefits associated with free accommodation in a place like Dubai would be very high relative to South African earnings and tax rates. These types of individuals alternate between an offshore place of work and South Africa, we would like to suggest that it would make sense to rather alternate between your offshore place of work and Mauritius – giving up the South African connection altogether.
Benefits of financially emigrating to Mauritius
Having been based in Mauritius for many years, we have experienced first-hand the significant advantages that come with financially emigrating to Mauritius.
From a tax perspective:
• The personal tax rate in Mauritius is only 15%.
• Although Mauritius taxes worldwide based on residence, it only levies the tax on monies remitted to
Mauritius.
• There aren’t any Capital Gains Tax, Estate Duty or exchange control systems.
From a personal perspective:
• The lifestyle in Mauritius is very similar to South Africa in terms of climate and outdoor living.
• The private schooling system is excellent.
• You won’t need to worry about getting ‘island fever’: There are numerous airline connections out of Mauritius including multiple daily flights to South Africa, three flights a day to Dubai and multiple flights to places like London, Paris, Australia and Hong Kong.
It is also relatively straightforward to get a visa to live in Mauritius. These visas range from work permits to investor and retiree visas.
Let us help you relocate to your home away from home
If you spend short or sporadic periods of time in South Africa and would like a realistic alternative, why not financially and physically emigrate and join us in Mauritius?
Relocating can be tough in terms of changing homes, having to make new friends, meeting new people, and leaving family and friends behind. However, a move to Mauritius comes with so many other benefits and we would be happy to assist you with not only your financial emigration out of South Africa but also your emigration into Mauritius. We have extensive experience in this area and can do the following for you:
• Advise on the visa you need to apply for.
• Assist in obtaining the visa.
• Project manage your financial emigration out of South Africa.
• Help with finding schooling and housing.
• Help with setting up your company in Mauritius.
Make sure you check out our Relocation Services page for more information or get in touch with us at info@localhost or +230 650 4030 to start your journey.