FOUR KEY CONSIDERATIONS WHEN RELOCATING TO MAURITIUS
The recently introduced Premium Visa is issued for one year and valid 180 days. It is renewable where necessary. The Visa is available to travellers, retirees, and professionals who want to move with their families and continue their business or remote work from Mauritius. Health protocols are implemented to ensure visitors’ and locals’ safety and help Mauritius remain a Covid-safe destination.
With the Premium Visa, you may not enter the Mauritian labour market. Applicants must prove that they have enough income from a source outside of Mauritius to obtain this visa.
Applications for the Premium Visa are submitted in Mauritius through the Economic Development Board. It takes 5 to 7 days to obtain a Premium Visa, and the main requirements include health insurance and proof of accommodation.
Mauritius has implemented irresistible investment options to attract foreigners, mainly South Africans. Property acquisition provides an avenue to obtain a 20 year Permanent Residency Permit.
The Mauritian Government currently offers an exquisite residency program for foreigners who would like to obtain permanent residence based on property purchase. To qualify, foreigners must purchase property within a designated scheme (IRS/RES/PDS or SC) put in place by the government.
Purchasing a property is one of the simplest options to relocate to Mauritius. Previously, foreign nationals were required to invest $500,000 in a property. This threshold has now been reduced to $375,000.
Compared with South Africa, where a South African is allowed to purchase a property as a freehold or through a 99-year lease agreement with the option of renewal, the title of the deed of Mauritius’s property remains under the property holder’s name from the onset. Many of Tax Consulting’s clients have begun to consider their property options. The company has facilitated a number of acquisitions done remotely, subject to visiting Mauritius and confirming the sale.
Exiting South Africa Correctly
It is essential to ensure that you remain tax compliant when exiting South Africa. The South African Revenue Service has become far more aggressive in recent years with South Africans living and/or working abroad – especially those that have not done a compliant exit.
The first step is to determine what type of exit you will make from South Africa. The two simplest options (with various iterations in between) are:
- Leaving South Africa permanently, to relocate elsewhere; and
- Leaving South Africa temporarily, with South Africa remaining home base.
The difference between the two comes down to tax residency and how it must be dealt with. As a tax resident of South Africa, a taxpayer is taxable on worldwide income and assets. As a non-resident for tax, one is only taxable in South African on South African sourced income and assets.
With both options, a solution must be found to ensure protection from double taxation. Generally, with a permanent move abroad, one will use financial emigration to cease tax residency of South Africa formally. With a temporary move abroad, one would use the Double Taxation Agreement between South Africa and Mauritius.
It is important to understand the “exit tax” from South Africa when ceasing tax residency. The exit tax is mainly unknown among laymen, but this declaration and payment must be made to SARS, to ensure that the exit regulations are concluded. If this step isn’t taken, SARS may argue that one has not fulfilled the exit formalities and thus remain taxable in South Africa on worldwide income and assets – never mind the potential for SARS to raise penalties and interest in this scenario.
Financial Emigration: The New Process
After years of South Africans successfully ceasing tax residency by using the financial emigration process, the Government has decided to remove the process as we know it and replace it with a more stringent verification system and risk management test. The practicality of the new process has yet to be announced.
Financial emigration applications under the current legislation will only be processed until the end of February 2022, if they have submitted prior to 1 March 2021. After that, the uncertain new process – which promises to be more stringent from a tax perspective and less so from an exchange control perspective, will begin.
This deadline gives South Africans little time to submit their applications. In the future, South Africans need to be cognisant of a more cumbersome process on the horizon.