The “TAX AND FINANCIAL EMIGRATION PROCESS” revolves around a six-page MP336(b) form passing through various bodies, each with their own rules, and their own purpose. The process was designed with the requirement that all parties contribute to formal emigration, with commencement at your ‘last’ South African bank and completion at the Reserve Bank:
1) The Bank
2) Mutuals
3) The Commissioner of South African Revenue Services – (SARS)
4) The Bank
5) The Reserve Bank (SARB – which sounds very similar to SARS, but is a different body. For the purposes of this article, I will refer to it as the Reserve Bank – to reduce confusion)
The Role of the Bank is that of regulator.
Firstly, a look over 4 major banks requirements and all insist that accounts with other banks in South Africa are closed and it is the only bank in this process of exit from South Africa. There is a reason for this – the bank takes on the role of regulator.
It checks that:
- You have the ability to reside outside of South Africa, and have a permanent residence abroad;
- Your documentation is current and acceptable in terms of administration.
- The assets listed on the MP336(b) agree with those in the retirement industry (Mutuals) as declared with support.
Once complete, it stamps the MP336(b) form and prepares your account to be an emigrant capital account.
The Role of SARS
Don’t think that you can approach SARS, without an original bank stamp on the MP336(b) form.
Once received, SARS treat the emigration request as a ‘deemed sale’ of all your assets on the date of emigration. This means they have the right to raise capital gains tax on your net assets.
Many emigrations occur with little to no CGT.
Once SARS issue a certificate, the original MP336(b) form is returned to the bank.
The Role of the Reserve Bank
Because of exchange control regulations, South African residents looking to transfer money abroad – are limited. Such transactions are also recorded. This process changes the status of residency and allows for net assets in South Africa to be transferred abroad.
The bank is licenced to deal directly with the Reserve Bank and will submit to the Reserve bank, the necessary documents and support required for the Reserve Bank to conclude financial emigration. On meeting the rules of the Reserve Bank, an approval allows for the emigrant’s net South African wealth to be transferred abroad.
At this part of the process, the information has been regulated, reviewed, taxes are clear and a final approval allows for the last bank to endorse any amounts approved for transfer out of South Africa through what is termed an emigrant capital account.
From the above, note the same original MP336(b) form moves through the departments of / applies to all stakeholders. This form is a declaration of South African Net assets on the date of emigration from the Reserve Bank and is current. It allows the Reserve Bank to prepare itself for the transfer of net assets out of South Africa. It represents a summary of South African net assets only.
The reason for explaining the roles above is for you to understand how interlinked the process really is, and that various players perform different tasks, all of which need to be passed.
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