Plan B: financial emigration ...

FAVOURABLE TAX: WHY MAURITIUS IS SOUGHT-AFTER

The key to financial emigration is to set up an offshore trust and move your investments or capital into it.

Alongside the Springboks’ recent performance and the spurt of hope they’ve given us for the 2019 Rugby World Cup, another conversation has been brewing at the weekend braais, airport lounges and golf trips. Financial emigration.

Rumour has it that currently 6 000 people leave South Africa per week. The current economic and political environment certainly hasn’t favoured many people over the last couple of years.

Offshore investment

Most of us believe we must emigrate physically to move our funds offshore, but that’s not as easy as it may sound and not necessarily the solution. Perhaps a more viable option is that should things really turn bad for the country, you’ve transferred your wealth to a “safe haven”.

Firstly, if you are serious about taking money offshore and emigrating financially, then start by using your R10 million annual foreign investment allowance. It’s possible to take out over R10 million per year, but this comes at a cost and some serious tax clearance.

However, it should not be a problem if your tax affairs have been in order. While this money will still be estate-dutiable, at least the first step of getting it out of the country will be done. From there on you can make the necessary shifts considering things from a tax perspective regarding all taxes payable.

As a matter of interest, you can get almost 100% direct offshore exposure in a living annuity: you can hedge your pension against the rand and take part in the growth of international markets.

The key to financial emigration is to set up an offshore trust, move your investments or capital into it and live from it.

Moving assets to your offshore trust creates a loan account and is estate-dutiable in SA. However, there are specific ways to get that loan account reduced by proper planning and using an international life policy. There are different options to get residency in a country. In Mauritius for example you need to invest $500 000. I’m investigating Mauritius as a destination to channel a client’s funds out of SA to obtain a more favourable tax structure. Why Mauritius? Its geographical location and political stability has made it a sought-after

There are various ways to get residency in a country

location.

Mauritius, through its Integrated Resort Scheme, has already attracted many South Africans and other foreigners. It also offers an occupation permit and residence permit.

Mauritius is attracting many investors because of its favourable tax system. The main thrusts of the Mauritian tax system are:

15% tax on corporate profits and on personal income (withholding tax)

No tax on capital gains, dividends, estate duty or inheritance

No restrictions on repatriation of profits, dividends and capital

Vast network of double taxation treaties

No exchange controls Mauritius has concluded 37 tax treaties and is part of a series of treaties under negotiation.