4 Key Considerations When Relocating To Mauritius-XP. Image credit: Supplied

Four key considerations when relocating to Mauritius

(Partner Content) Mauritius has quickly become an attractive destination for many South Africans who want to improve their lifestyles. The Government in Mauritius implemented new immigration regulations that make it easier for South Africans to embark on a more extended stay in the country.

by Tax Consulting SA

01-02-2021 19:49

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4 Key Considerations When Relocating To Mauritius-XP. Image credit: Supplied

Premium Visa

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.

Property Acquisition

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.

ABOUT Xpatweb:

HOLISTIC EXPATRIATE SOLUTIONSThe Xpatweb group has been in existence for over 15 years and includes over 100 professionals, including immigration specialists, mobility practitioners, tax practitioners, attorneys, and chartered accountants. They offer holistic, client-centric, and fully compliant expatriate and work visa solutions. Clients can expect an exceptional end-to-end service that starts with an initial technical meeting to discuss any past challenges, a recommended optimal solution, and the creation of a roadmap and protocol for service delivery. They also offer an on-premises immigration audit service to confirm expatriate employees hold legally obtained, valid visas, and that their duties align with their visa conditions. In addition, their unique online immigration tracking system helps you to easily manage and track expatriate assignees across the globe, is fully customisable and dashboard-driven, and provides a secure repository for storing assignees’ documents.