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Emigrating? Make sure you level with the taxman first

A popular misconception around financial emigration is that you have to give up your South African passport and citizenship.

A growing number of South African expatriates risk falling foul of local tax laws because they don’t understand the concept of financial emigration, and therefore don’t act on it.

It is therefore vital that prospective expats go through the formal process of changing their status with the Reserve Bank to that of a non-resident when leaving the country permanently.

If you’re emigrating from South Africa, or regard your home as being elsewhere, you can’t simply assume that you’re out of the tax net because you’re no longer living in the country. You have to level your affairs with the Reserve Bank and the taxman, or you’ll not only remain liable to report income, but you’ll also lose out on a host of benefits. 

By going through the financial emigration process, you will no longer be regarded as a tax resident of South Africa. One of the most important benefits of this is that retirement savings and annuities can be withdrawn and transferred offshore, even if you are still under the age of 55. This offers South Africans a significant level of protection from currency volatility.

A popular misconception around financial emigration is that you have to give up your South African passport and citizenship. Financial emigration doesn’t affect your citizenship in any way – you can keep your ‘green mamba’. It also doesn’t affect your ability to own property or assets in South Africa.

Financial emigration is a three-step process:

  1. Contact your bank and complete what is known as an MP366 form. The bank sends this to the Reserve Bank.
  2. Contact Sars to apply to for an IT21(a) certificate, which confirms that your tax affairs are up to date and you have no outstanding issues.
  3. The SA Reserve Bank reviews the MP366 and tax clearance certificates, after which they make a final determination on your application.

South African expats living and working in areas like the Middle East don’t necessarily have to emigrate financially if they intend returning, but they will remain liable to submit tax returns,  and after 2020, new tax legislation means they will be taxed on all income over R1 million. The suggestion is that expats in this position get advice from a trusted financial advisor when assessing their options.

Tim Mertens, is the chairman of  Sovereign Trust. 

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The criteria for tax residency don’t have anything to do with financial emigration, which is more for exchange control purposes, and if you want to pull your retirement savings out of the country.


A very misleading article. Since when was it necessary to embark on a process of financial emigration in order to be considered non resident for tax purposes, This is precisely why there is so much confusion around the issue. This really does leave an incorrect impression that financial emigration is a necessity – it is not.

And the relative form MP366 should read MP336 (for financial emigration)

All so clumsily handled in true new SA style. My guess is that the end result is the further permanent flight of potential taxpayers who could have been coaxed into being lightly milked in a more benevolent net. Stupid is as stupid does.

Thanks to commentators that highlighted that financial emigration is not required to break tax residency!

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