Episode Transcript
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Unknown (00:00):
On today's episode of
investing in the American Dream
podcast, we have featured guestSonia Clark Fpp, regional
director based out ofJohannesburg, South Africa,
whose focus is on US immigrationthrough the EB five and e to
investment visa programs. Soniawill be discussing the most
recent changes to the taxlegislation by the South African
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government, which went intoeffect on March 1 2021. And how
these changes could preventSouth Africans from withdrawing
retirement funds for a period ofup to three years and capping
the exemption on foreign earnedincome. Sonia's goal today is to
help inform and prepareinvestors in respect to
navigating the situation withclarity and success and to
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provide her clients with thebest tax experts so they can
build the right roadmap whenplanning immigration. Let's get
into it. Hi, Sonia, it's sogreat to have you on the podcast
today. Thank you for joining usfrom South Africa.
(01:02):
Hi, Jessica, thank you so muchfor having me.
So Sonia, I've provided ourlisteners with a brief overview
of our topic today. But I havesome questions that came up
after our last webinar inrelation to the tax legislation
changes. So I'm hoping you canaddress some of those. But
first, could you please explainwhat these changes in the
legislation mean to investors inSouth Africa?
(01:25):
Absolutely, Jessica. Sobasically, what this means for
investors with internationaleconomic interests is that the
potential of double taxation onthe income is imminent.
So would you say a commonmisconception you see among
South African expats is thatthey believe that they are
automatically tax exempt justbecause there's a double
taxation treaty in place betweentwo countries.
(01:48):
Yes, Jessica. And unfortunately,these presumptions neglect, to
acknowledge the reality of thesituation, which is that there
are various factors that need tobe considered and objectively
proven, as citizens are stillrequired by law to file a tax
return and claim exemptionsunder the treaty relief.
So I think it's great that yourgoal today is to help inform and
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prepare investors in respect tonavigating the situation.
Yes. And also the reason thistopic so relevant to our south
african audience is becausearound 23,000 taxpaying
residents actually leave SouthAfrica every year, which is
quite astounding. And in aneffort to curb this Exodus, the
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South African government amendedthe expatriate tax law. By
capping the exemption on foreignearned income at 1.2 million
Rand, and any person who'sconsidering leaving South Africa
permanently should carefullytake into account that the tax
implications of ceasing to be atax reason and Tia as well as
(02:53):
the further consequences of sucha departure should he or she
formally emigrate for exchangecontrol purposes and immigration
for tax purposes could have animminent tax consequences with
possible liability protects. Andthis liability is often missed,
which could result in incorrectdisclosure being made or late
(03:14):
payments or tax and this in turncould actually attract penalties
and interest.
So what is the new financialimmigration process for South
Africans?
So while the new process cameinto effect, as we know from the
previous webinar on the first ofMarch 2021, and is undergone
various changes, such as theprocess is now fully tax focused
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on whether or not you meet therequirements to cease tax
residency in South Africa. Sobasically, it's the formal
process with the South Africanreserve bank to know oneself as
a non tax resident for tax.
So we talked briefly about exittax. Can you elaborate?
(04:01):
Of course, sure. So exit text isthe text that might be paid on
certain worldwide assets whenone ceases tax residence
residency for South Africa andthis is a fundamental step in
ceasing residency, often onethat is forgotten leaving the
door open for saws to questionwhether one has fully met the
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requirements to cease residency,which is a big concern.
Right. And why is it importantto consider the tax implications
for your exitas well so the South African tax
tax legislation, as we know iscomplex and a determination
terms of the tax residency takesa taste of one specific
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situation must be done to ensureboth compliance as well as a
smooth and clean exit from SA sodealing moving out the country
does not cut one TechStars andcan often leave people in a
situation where they are stillliable for tax on gold. on
income and assets after leaving,which is something to be well
(05:03):
noted.
Right. Thanks for breaking thatdown. And lastly, can you
explain the importance of havinga roadmap, let's say when
planning and immigration,of course, absolutely. So the
road map is specificallyimportant for those that have to
yet leave sa but are planning todo so. So understanding one's
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full potential or one's full,full personal situation and
their plans is essential increating a roadmap. And that is
both practical as well asefficient. So that is hard
money. Important to note. Well,Sonia,
thank you so much for your timetoday and for giving us that
high level overview on SouthAfrica's tax legislation changes
(05:48):
and how double taxation couldaffect South Africans,
just because so muchappreciated. And I'm happy to be
able to share this valuableinformation with my fellow South
Africans. And I would like toinvite you all to join us for
our second webinar on the topic,South Africans immigrating to
the US investment programs andtax planning considerations. And
(06:10):
this webinar will help youunderstand the US investment
programs and how double taxationmay affect South Africans moving
to the United States. Thank you,Jessica.
Thank you, Sonia. And if youwould like to meet with Sonia or
attend this webinar, you canregister online at www dot first
pathway.com Thanks again.
It's a pleasure. Thank you,Jessica for having me again.
(06:35):
If you would like to know moreabout first pathway partners,
and how they can help you with adirect Eb five investment or if
you're looking for other visaopportunities such as an E two
visa, please contact themdirectly online at www dot first
pathway.com