Emigration Assistance

Formal Emigration from South Africa

What is formal emigration?

Many South Africans have emigrated without formal emigration from South Africa.

Formal emigration is the process to close your financial affairs when leaving South Africa immigrating to another country-and change your status-for exchange control purposes from resident to non-resident. Emigration does not affect your citizenship or the right to retain your South African passport. The may be many advantages of arranging this formal emigration:

  1. Should there be a potential inheritance, these can be remittance only if the beneficiaries have formally immigrated.
  2. If there any insurance policies or retirement annuities, there can be made paid up and proceeds can be remittance. They can be paid out if retirement age is not reached.
  3. Closing the door on all tax and exchange control issues in South Africa
  4. If you formally emigrate, your non-South African assets are no longer subject to Estate duty in South Africa.
  5. Passive income i.e. rent, dividends, director`s fees, salary for services rendered in South Africa and income from trusts can be formally remitted.

We can assist in arranging all aspects of formal emigration.

To formally emigrate, if there are assets in South Africa, it is necessary to get a tax clearance and to submit a tax return at date of emigration which would tax income until date of immigration. On the date of immigration all assets other than fixed property would be valued and any capital gains would be taxed as an effective exit tax.

If there is income on fixed properly, they would continue to be taxed in South Africa after immigration. Capital gains would be taxed when realised. All assets held in South Africa after immigration would be held on the bank handling the emigration and held in a blocked account.

Emigration Limits.

The amount of capital that can be taken overseas on emigration is as follows:

  • Single person R10 Million per year
  • Family unit R20 Million per year
  • Application to the South African Reserve Bank can be made to remit larger amounts.
  • These are reduced by foreign capital investments
  • A travel allowance of up to R1 million per adult and R200 000 per child under the age of 18 years. The travel allowance may not be accord more than 60 days prior to departure, and
  • Export of household and personal effects, motor vehicles, caravans, trailers, motorcycles, stamps, coins and minted gold bars(excluding coins that are legal tender in South Africa) within an overall insured value R2 million.
  • If I emigrate from South Africa, do I have to relinquish my South African citizenship?
    No. Emigrating from South Africa formalises your exit from South Africa for exchange control purposes. It does not mean that you have to relinquish your South African citizenship. You can retain your South African passport.

  • I have been living abroad for a number of years, how do I formalise my emigration?
    In terms of exchange control policy, private individuals (natural persons) who reside permanently in a country outside the Common Monetary Area are required to formalise their emigration by completing a Form MP336(b).

    Your emigration should be formalised through a local commercial bank of your choice in South Africa as follows:

    1. Complete a Form MP336(b) – Emigration: Application for foreign capital allowance.
    2. Apply for a Tax Clearance Certificate
    3. If you have resided permanently outside South Africa for a period longer than five years and you do not possess any assets other than an inheritance or insurance policies, it would not be necessary to obtain a Tax Clearance Certificate - Emigration.
    4. Submit the Form MP336 (b) and the Tax Clearance Certificate - Emigration, if applicable, to the bankers attending to your emigration. You will also have to submit any other documentation as required on the Form MP336 (b), which includes a copy of the permanent residence permit, if you have been granted permanent residence abroad.
  • Can I transfer the proceeds from the insurance policy directly to my overseas bank account?
    Yes. The proceeds from insurance policies may be transferred directly to the emigrant abroad where the emigrant has no bank account in South Africa, provided the person’s emigration has been formalised and that the foreign capital allowance limit will not be exceeded.

  • South African Retirement Annuities?
    Retirement annuities in South Africa can transfer the full capital value of your South African RA`s offshore before age 55

Requirements when applying for emigration

  1. Completed form MP 336(b)
  2. Certified ID documents of husband and wife
  3. Certificate of Citizenship in new country
  4. Latest Bank statements of all accounts
  5. Insurance Policies (Retirement Annuity, Endowment policy, Life policy etc) – must have original copy of policy
  6. Fixed Properties – valuations at date of emigration
  7. Stocks, shares, unit certificates etc – Listed Investments and Unlisted Investments – valued at date of emigration
  8. Debtors ( loan accounts, credit cards etc) – at date of emigration
  9. Interest in Trusts
  10. Any other liabilities

Voluntary Disclosure Programs

For South African tax payers who have not previously formalized their foreign assets, it is necessary to formalize their foreign funds with the South African Revenue Bank.

The South African Reserve Bank Regularization Program

  1. The Reserve Bank regulation program works as follows:
    Depending on various factors a “forfeit to the state” i.e. fee is changed to regulate the Unreported / unauthorized foreign funds. It is possible for certain situations to be legalized without any “fee” i.e.
    • Funds earned overseas
    • Funds that were in owned by immigrants to South Africa prior to the arrival in South Africa.
    • Funds inherited overseas (for funds inherited overseas from a non South African resident)

Taxation VDP (Voluntary Disclosure Program)

In terms of this program a taxpayer would need to disclose and thus regulate their tax situation. Were taxes were not paid since 2001 on foreign taxes the income would be taxed without penalties but interest would be charged on late payment of taxes.

For more information you can contact:

Director: IAPA Johannesburg
Chartered Accountants
Tel: 011 887 8593
Cell: 082 821 3449
Email: david@iapa.co.za
Website: www.iapa.co.za

Other Services We Provide Include:

  • Taxation
  • Completing personal and corporate income tax returns
  • Financial Statements of Close Corporations
  • Providing company secretarial services including Company and Close Corporations formations
  • Accounting Services
  • Advising generally on financial matters and financial management
  • Due Diligence Investigations
  • Computer Auditing
  • Incentives
  • Franchising
  • Wills and Trusts
  • Estate Planning and Administration
  • International Tax
  • New Business Establishment
  • Listings
  • Forensic Auditing and Investigations
  • Emigration Assistance

Make sure you have the MOST TAX efficient structure