Option 1: Residence and Citizenship by Investment
If you are choosing to stay in South Africa but seeking a backup plan, investment migration offers viable options. By participating in residence or citizenship by investment programs, families can secure improved travel and economic mobility, diversified opportunities, and a safeguarded physical and financial future.
With the NHI Bill’s implementation, safety, security, first-class healthcare, reliable infrastructure, and better family prospects have become paramount considerations. For those looking for a plan B or a future exit strategy, countries boasting excellent private healthcare systems such as Australia, Canada, and Switzerland have emerged as attractive destinations for investment migration. These countries offer residence rights with a route to citizenship to investors and their families in exchange for substantial investments.
According to the Henley Ultimate Portfolio, the following countries, which all offer investment migration programs that are popular among South Africans, score higher out of a 100 in the private healthcare parameter than South Africa:
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- Australia: 76
- Canada: 76
- Switzerland: 74
- New Zealand: 58
- Italy: 50
- Portugal: 50
- Malta: 41
This stands in stark contrast to South Africa’s score of 25, again reinforcing the need for South Africans to look abroad.
Option 2: Financial Emigration
For taxpayers seeking to physically move abroad, ceasing your South African tax residency allows you to successfully cut ties with SARS thus avoiding the impact of the implementation of the NHI Bill altogether. Financial Emigration is the process used by many South Africans abroad to formalise their non-resident tax status for both tax and exchange control purposes. It is important to understand that simply moving abroad does not negate one’s obligations to SARS unless the formal process is successfully completed. Cessation of tax residency allows you to protect your foreign earned income from being taxed by SARS along with many other benefits. This freedom entails a complex step by step process, including obtaining a SARS Notice of Non-resident Tax Status Letter.
Remittance of funds
Both options above inevitably lead to the remittance of funds abroad. A crucial component in the process of financial emigration and investment migration is the Approval International Transfer PIN (AIT PIN) in order to allow you to successfully transfer funds abroad. The introduction of AIT on 24th April 2023 saw several changes to the Tax Compliance Status (TCS) process, including the consolidation of the “Emigration” TCS pin and the “Foreign Investment Allowance” TCS Pin to create the new “Approval for International Transfer” (AIT) TCS Pin. It is important to understand how to go about applying for this PIN as well as the difference between applying for an AIT PIN as a South African tax resident versus as a South African non-resident taxpayer as SARS’ strategic intent focuses on the source of funds, statement of assets and liabilities as well as the where the funds will be going to.
Compliance is critical
The implementation of the NHI Bill continues to prompt knee-jerk reactions from taxpayers however before one seeks relief abroad a critical starting point is ensuring overall tax, legal and financial compliance, with the AIT PIN reinforcing SARS’ compliance strategies. This entails detailed planning, compliance checks, and strategic financial planning. Highly skilled tax experts are best placed to identify and remedy any non-compliance that may arise. Skipping this step may have dire consequences and setbacks in one’s journey to successful financial emigration or residence or citizenship by investment abroad.
