|Published:||11 Jun at 6 PM|
Become aFeatured Expat
and take our interview.
Become aLocal Expert
and contribute articles.
South Africa’s new tax laws are forcing expats to cut financial ties with the home country.
Reports that financial emigration has risen by 30 per cent in the past two years have confirmed the effect on high earning South African expats of the new tax rules about to be brought in. From March next year, South African expats working overseas will pay up to 45 per cent tax on annual earnings of over one million rand. The first announcements of the upcoming change started the financial exodus as South African expat professionals rushed to cut all financial ties with their homeland.
The country is already facing a brain drain of top talent due to its over-taxation of the wealthy, with those earning more than 700,000 rand charged at 41 per cent. In addition, local government taxes, medical contributions and pension payments must be made, thus making sense for high earners to leave and even become citizens of other countries. The numbers of expats using second citizenship to avoid over-taxation soared 53 per cent during the last six months of 2018.
Financial emigration involves a declaration the applicant intends to live permanently outside South Africa, with non-residential status needing formalising by Sars and the South African Reserve Bank. The thousands of high-earning professionals who’ve already left have created a skills shortage expected to affect the country’s economy. Favourite destinations include the UK, USA, Dubai, Portugal, New Zealand and several Asian states, with the majority of emigrants deciding to ignore their home country tax liabilities once they've made the move..
Comments » No published comments just yet for this article...
Feel free to have your say on this item. Go on... be the first!