Mauritius Could Be Paradise For Emigrating South Africans. But Will SARS Let You Go?

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However, those considering Mauritius as their future home will want to ensure their idyllic lifestyle is not rudely interrupted by SARS and unforeseen tax concerns.

“To protect your future income earned abroad from South African tax, you need to objectively prove to SARS your intention to leave the country permanently, for which best practices require a professionally compiled roadmap,” says Thomas Lobban, Legal Manager: Cross-Border Taxation at Tax Consulting South Africa. Lobban holds a Master of Laws (LLM) in Tax Law.

What makes Mauritius attractive, how do South Africans qualify, and what should they do to ensure a smooth transition, free from tax troubles?

Incentives for Mauritius

On 7 June 2022, the Hon. Minister of Finance delivered Mauritius’ Finance Budget Speech 2022-23, revealing a number of initiatives that are more welcoming to expatriates. This is on top of the initiatives taken in the 2021-22 year.

Aditi Boolell, Director of Temple Group in Mauritius, identified the below as the most prominent initiatives for South Africans to take note of:

  1. The Economic Development Board (EDB) aims to attract 50,000 foreign retirees this year and launched a dedicated online portal to provide them with information on property, lifestyle and amenities in Mauritius.
  2. The EDB also set up an exclusive concierge service for investors and retirees.
  3. The Bank of Mauritius will ensure business or personal accounts can be opened within one week.
  4. There is also no cost at all to start and incorporate a business, and corporations are taxed at a flat rate of 15 percent.
  5. Personal income is taxed at 10 percent up to Rs 700,000; 12.5 percent between Rs 700,001 and Rs 975,000; and 15 percent above Rs 975,000.

There are many more lifestyle and business incentives, and the government is focused on building up the economy through industry.

What options are available?

South Africans have several main residency options available to them. According to Zainab Bouziane, Head of Africa Desk at Xpatweb, the most popular options seen in practice include:

  1. An Investor’s Permit that requires one to invest a minimum of USD 50,000 in a company in Mauritius.
  2. The Retired Permit, available to those over 50 who can prove they have USD 1,500 monthly to finance their lifestyle.
  3. The Property Acquisition option whereby foreign applicants can purchase property within the government’s scheme. Previously, the required value of the property was USD 500,000 but this has been reduced to USD 375,000.
All three permit types allow for dependents to accompany the applicant.

“The Retired Permit is by far the most used option by our clients, and we foresee this trend will continue over the next few years as South Africans look for more favourable destinations to retire to,“ said Bouziane.

What to do about tax

All South African tax residents are required to declare their annual worldwide income to SARS and pay tax on it; unless one claims a qualifying tax exemption. So when relocating to Mauritius, they need to carefully consider their options for cutting ties with SARS regarding their foreign income.

Unfortunately, this is not as easy as simply emigrating from the country. SARS continues to treat expatriates as residents for tax purposes unless they follow a formal process to be recognised as a non-resident.

“This comes down to an applicant’s ability to objectively prove their intention to leave South Africa permanently. ‘Objective’ is the key word here, meaning that SARS will require proof in the form of documentary evidence that supports the position of being tax non-resident,” says Lobban. If they cannot, they will have to meet their yearly tax obligations, even from Mauritius, and risk paying double tax.

Getting the best assistance

Emigrating South Africans should avoid being tangled up in matters of international taxation.

Without professional assistance in dealing with SARS and compiling evidence for their roadmap, things can go horribly wrong and cost more in the long run.

“It is always advised to engage a tax partner that knows SARS’ processes and the depth of information that will satisfy their requirements – preferably a firm with a strong legal component,” says Lobban.

Gone for good

The excitement of moving to Mauritius and experiencing all the country has to offer needs to be tempered with the acknowledgement that one’s tax affairs will always come first.

The good news is that South Africans can start afresh there, free from the worry that SARS will come looking for them.

“For peace of mind, start getting your roadmap together sooner rather than later, with the right help, and you’ll never have to look back,” says Lobban.

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Withdrawal Of Waiver For Critical Skills Graduates In SA

Withdrawal Of Waiver For Critical Skills Graduates In SA

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Concerns by foreign national graduates in SA on the new stringent requirements

Over the past weeks, the Xpatweb team has released a series of articles which have in detail described the effects of the release of the new Critical Skills List. The articles have detailed what the notable inclusions and exclusions of occupations as well as new rigid requirements to obtaining a Critical Skills Work Visa, are.

A facet of applicants least observed in Immigration, are foreign nationals who have graduated from a South African tertiary institution. For a while, it was a smooth transition for foreign national graduates to move from a South African tertiary institution into the workplace as they qualified for a Critical Skills Work Visa by completing their qualifications in an occupation on the Critical Skills List. So much so that in 2016, the Minister of the Department of Home Affairs issued an Immigration Directive for foreign national graduates in South Africa to be given consideration of Permanent Residence status.

The aforementioned Immigration Directive waived the following notable points to allow foreign national graduates to apply for Permanent Residence:

  • The requirement of the submission of proof of post-qualification experience of at least five years;
  • Written confirmation from a professional body confirming skills or qualifications;
  • The submission of testimonials from previous employers; and
  • The acquisition of five yeas post-qualification experience.

In light of the new Critical Skills List being released, the Department of Home Affairs has withdrawn this Immigration Directive with immediate effect, thus meaning that all prescribed requirements of the visa or Permanent Residence application must be met. This proves the sternness of the Department and creation of exclusivity, to not only obtaining a Critical Skills Work Visa, but also obtaining Permanent Residence in South Africa under the category of section 27(b) as contemplated in the Immigration Act.

Considerations of the Withdrawal

In the defence of the Department of Home Affairs, and in line with the new onset requirements of the new Critical Skills List, the aforementioned Immigration Directive has become redundant and is not compliant with current Immigration policy.

It is logical that in order to assess a foreign national’s eligibility for Permanent Residence, one has to work backwords and assess their suitability of a Critical Skills Work Visa. The lure of a Critical Skills Work Visa is the ability to almost instantaneously apply for Permanent Residence, which is to attract and retain industry professionals to fill the skills and knowledge gaps in the country. A graduate cannot be considered a professional as they would not have the necessary practical working experience to help fill the gaps that the South African government considers critical. They would still require the relevant training and accumulation of skills and knowledge – those that only a suitably qualified professional can transfer to them.

Furthermore, the statutory professional bodies in South Africa who regulate professionals in the relevant industries, without the necessary post-qualification experience, cannot grant a graduate a professional designation, further supporting the Department of Home Affairs vision of intendent recipients of Permanent Residence under the category of scare skills.

Change of career and life trajectory in South Africa

This is undeniably a shock to the system for foreign national graduates who had intended to use the Immigration Directive to their advantage to obtain Permanent Residence in South Africa. They now also may find that their intended occupation is no longer deemed critical or that they now have to comply with all the prescribed requirements for the intension of permanently residing in South Africa. This could potentially derail those wishing to obtain a Critical Skills Work Visa, or any other Work Visa, if the graduate does not have an offer of employment from a South African company. For most foreign national graduates, they have spent the majority of their lives in South Africa (living and formative schooling years) and have envisioned their lives and career growing with them in our country of opportunity.

Xpatweb’s experienced team of Expatriate Solution Specialists can provide assistance in navigating, what can be a tedious process, to help foreign national graduates attain their goal of Permanent Residence in South Africa.

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Critical Skills List Gazetted But What Comes Next?

Critical Skills List Gazetted But What Comes Next?

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“As world economies reopen, local enterprises can finally source expatriate talent to fill the persistent skills gaps keeping them from achieving their strategic objectives,” says Tanya Tosen, Master Mobility, Tax and Remuneration Specialist at Tax Consulting South Africa.

However, warns Tosen, organisations need to treat foreign expatriates like the assets they are, carefully administering their reward package, payroll and tax matters to the mutual benefit of employer and employee.

Attractive reward package

To entice the best foreign skills, organisations must know how to structure an attractive total reward package. This can’t stop at an internationally competitive basic salary and benefits. It must be augmented with a meaningful corporate culture, a sincerely ethical world view, a work environment centred on well-being, a progressive performance management style, and much more.

“Today’s global employees will hold out for greener pastures if an employer’s offer doesn’t meet their expectations,” says Tosen.

Tax structuring

Expatriate packages are generally expensive and withholding tax is costly to employers. Yet, without being aware of it, they might be paying more in tax than they legally need to. Having a reward professional review and restructure an employee’s tax could yield significant savings for both parties.

“Expatriate remuneration or tax specialists are trained to identify tax inefficiencies and leverage several proven structuring mechanisms to reduce excessive tax,” says Tosen.

Tax support

Foreign employees who physically render their services in South Africa must pay tax to SARS and their employer must withhold the required PAYE. Under certain conditions, they may also become residents for tax purposes and their tax obligations will change accordingly. In effect, this could mean they may still be liable to the tax authority in their home country but would also need to declare their worldwide income in South Africa.

“Employers must adapt promptly and offer support in these complex tax matters because an expatriate’s non-compliance can easily become their problem,” advises Tosen.

Strong payroll function

Setting up a payroll becomes much more complicated if the expatriate has transferred from a foreign division of the employer’s company. This may require an additional ‘shadow’ payroll to be set up in the country that does not pay their basic salary, where income, benefits and deductions are shared between the two to calculate the correct withholdings in each jurisdiction.

“Employers must ensure their payroll can cater to complex and time-sensitive taxation scenarios, backed by expertise in multi-jurisdictional tax requirements,” says Tosen.

Tax returns

As registered taxpayers, expatriates must submit an accurate tax return accompanied by an employer issued IRP5 to SARS by its prescribed deadline. The return must link back to the employer’s payroll, match the PAYE deductions and agree with their biannual break-even tax reconciliations.

“Foreign nationals will need assistance with the country’s complex tax requirements as well as help liaising with their home tax authority in providing the necessary returns to them,” says Tosen.

Engaging a service provider

An employer’s payroll or HR team may be uncertain of the legal requirements or best practices for remaining compliant while offering the support their expatriate employee needs.

Developing an attractive reward package, structuring tax optimally, offering tax support, setting up a responsive payroll and assisting with tax returns are only the tip of the iceberg. A total reward package that attracts top expatriate skills should be a frustration-free employee experience that must be carefully designed and executed.

“Instead of taking risks, organisations should engage an expert partner in expatriate remuneration and tax – one with a strong legal team for that extra layer of protection and assurance,” says Tosen.

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New Work Visa Adjudication Process – Correct Strategy, But Expect Teething Problems

New Work Visa Adjudication Process – Correct Strategy, But Expect Teething Problems

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What we know so far is that the purpose of the centralised system is to ensure consistency and uniformity in application of the Immigration Act and Regulations toward the adjudication of visa submissions. The implementation of this new system is seen as an attempt by DHA to enhance the integrity of its Immigration Department and to show efforts to align systems in the interest of national security whilst contributing to the recovery of the economy.

DHA had been made aware that there are inconsistencies and arbitrary rules by officials at the Missions which has led to Consular Officials (in different Missions, in different countries) requesting non-prescribed requirements for the same visa application. At time, these requested requirements can change weekly depending on the Official receiving the documents, often results in an inconsistent and unpredictable adjudication process. Although, this is not the case with all Missions, as some are compliant and enforce the correct visa application processes and procedures.

As an expatriate solution firm for the past 17 years, we welcome the new system and are of the opinion that with proper and systemic implementation, the centralised system will improve on the effectiveness and uniformity in the adjudication process of long-term visa applications. However, like with any structural change, teething problems are expected and are currently affecting expats and their employers around the globe. An example of this is greatly increased processing times of visa applications as a result of a bottleneck due to the vast number of visa application received at the DHA Head Office from the Missions. One can only hope that DHA is being proactive and jumping on implementing measures to mitigate further delays in the release of visa application outcomes and also to increase the staff compliment at DHA Head Office to relieve the pressure of the volume of applications received.

We commend DHA on the steps taken to improve processes, however, they will need a more permanent and robust solution to address the ever-evolving Immigration standards. To help us further understand and unpack the new centralised system, as well as discuss other developments within DHA, Xpatweb will be hosting their maiden “Reinventing Mobility Conference” on 30 June 2022. Guests will have the privilege of having the executive Directors from DHA answer all their burning questions.

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Dutch Recruitment Drive For Skilled South Africans Highlights Need For Emigration Roadmap

Dutch Recruitment Drive For Skilled South Africans Highlights Need For Emigration Roadmap

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“We have observed an unprecedented demand from various industries in the Netherlands for highly-skilled, qualified South African candidates,” explains Roxanna Naidoo, Tax Attorney at South Africa’s largest independent tax practice, Tax Consulting South Africa.

South Africa was one of the Netherlands’ top 10 source markets for migration in 2021, with almost 2 000 South Africans emigrating to the country in that year, a 2022 report by the Dutch statistical bureau CBS shows.

As the Dutch labour market continues to tighten, CBS further reports that an oversupply of available positions and an undersupply of qualified candidates has resulted in the availability of 133 jobs for every 100 people.

Skills most in demand are those in engineering, information technology, auditing, financial services, accounting, medical, management, and specialist products.

Securing a Highly Skilled Migrant Residence Permit

To live and work in the Netherlands, candidates require a Highly Skilled Migrant Residence Permit, which is available to foreign nationals who are considered able to make a contribution to the Netherlands’ knowledge-based economy.

Successful applicants should have a job contract with an employer or research institution in the Netherlands, with a salary base that cannot be less than that of a Dutch national in the same position.

In addition, certain salary criteria must be met: Should the jobseeker be over the age of 30, the minimum gross salary of the Netherlands-based position must be €62,726 a year. If above 30 years of age, the employee should earn a minimum gross salary of €45,995 a year.

The permit remains valid for up to five years, or for the duration of the employment contract.

Engineering expertise most in-demand skillset

Leading the cohort of in-demand skills in the Netherlands are engineering-related professions, with around 13% of all job advertisements relating to positions available in engineering, most significantly in mechanical, industrial, electrical, food, biomedical, energy, computer science and civil engineering.

Also in demand are skilled, qualified candidates with expertise in human resources, ICT security, pedagogy, solar installation, healthcare, and construction.

“Incredible opportunity exists in the Netherlands for skilled South African ‘knowledge workers’ wishing to take advantage of the current recruitment campaign. But to ensure a successful move, each candidate must ensure that they are adequately guided through the intricate due diligence processes on both the Dutch and South African side. This is where we come in,” says Naidoo.

The realities and intricacies of relocating

Those qualifying South Africans that have elected to take advantage of the Dutch mass recruitment drive have soon discovered the intricacies involved in the relocation process.

While the Netherlands offers an impressive government-funded ‘soft-landing programme’ for expatriates, critical financial, tax and healthcare considerations must be made in South Africa prior to leaving, as Naidoo explains.

“It is not a simple as just securing a position, selling your home and booking your flight,” she says.

Recognising this critical need, Tax Consulting South Africa has partnered with an industry-leading Netherlands-based mobility placement company, providing South African expats with support both in exiting South Africa and in ensuring their successful resettlement in the Netherlands.

“Through this partnership, we are able to offer each individual a holistic emigration roadmap that will review your South African medical aid, life policies and insurance, look at your assets and retirement annuities, provide banking strategies to move funds offshore, and close off your tax affairs with the South African Revenue Service,” says Naidoo.

“Essentially, you will be thoroughly guided through both your exit from South Africa and your entry into the Netherlands.”

The partnership is able to assist candidates that have already secured a placement in the Netherlands, as well as those qualified South Africans looking to be placed in a suitable role.

Tax Consulting SA works closely with a portfolio of Dutch companies actively recruiting South Africans for skilled positions.

Having the right specialists by your side can accelerate your Netherlands dream into a reality and ensure a stress-free process all together.