Global Courant 2023-05-15 10:00:44
Wealthy South Africans want to leave South Africa as the power crisis deepens.
Speak against Money WebAmanda Smit, a managing partner at investment consultancy Henley & Partners, said there has been an increase in the number of people inquiring about investment migration products in South Africa and other countries.
Smit said many of the people considering migrating their investments or leaving the country see it as a way to improve their standard of living, their ability to travel, access better education for their families and keep their wealth safe. set.
According to the managing partner, the spike in people wanting to leave the country can be attributed to growing concerns among South Africans about the power struggle, the volatile currency and the general state of the economy.
South Africa’s energy crisis is at its worst in years, with ordinary citizens facing blackouts of two to four hours at a time, sometimes three times a day.
Cumulatively this year, the country has had about 35 days of blackout.
According to Smit, the type of people who decide to leave include highly successful and well-established business people with families that want to carry out their ‘Plan B’.
However, there is also a growing trend that people from financially less fortunate positions are also leaving.
Recent data from the South African Revenue Service (SARS) showed that thousands of South Africans have ceased to reside in the country for tax purposes, suggesting that a large number of people are emigrating.
In February, Edward Kieswetter, the tax commissioner, admitted that more than 6,000 people had left the country. However, he said the headlines suggesting wealthy people are leaving the country are exaggerated.
Despite Kieswetter making this claim, tax figures from SARS’ national tax report for 2022 revealed that since 2017, more than 40,500 taxpayers have indicated that they are no longer tax resident in South Africa.
It is important to note that a taxpayer can still be a South African citizen while being subject to taxation in another or several countries; however, several tax experts, including Thomas Lobban of Tax Consulting SA, have said ending tax residency has become more difficult and, as a result, the actual number of people leaving may be higher.
In light of the growing trend of people moving abroad, the tax authorities have raised the bar in terms of tax emigration procedure and tax compliance.
Danielle Luwes, a tax manager at Hobbs Sinclair, said taxpayers are required by law to pay taxes to SARS on their global income, both local and foreign, and estate taxes on their global assets.
She said it is increasingly important for taxpayers to make sure their taxes are in line with the law before they leave.
Where are they going
Henley & Partners says places like Portugal, which offers a residency program through investments, are becoming very attractive to high net worth individuals.
In addition, Smit added, Namibia has emerged as an interesting option that is not only similar in culture and wealth to South Africa, but also has a tax system that offers several benefits.
“It is a withholding tax regime, you are not taxed on the worldwide income. They have no gift tax, no estate tax, no estate tax. So it makes a lot of sense for wealthy South Africans to have a safe alternative place to stay in Namibia.”
Read: Warning about tax deadline reaching this month
