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More South African taxpayers are moving to this centrally-located island near Europe


As the South African Revenue Service (SARS) intensifies its focus on the tax compliance of high net-worth individuals (HNWI), a self-governing island nation located in the Irish Sea has steadily emerged as an appealing emigration destination for prospective South African expatriates.

The uptick in interest in emigration to the Isle of Man (IoM) follows intensified tax scrutiny on the country’s wealthy and the establishment of SARS’ HNWI Unit in 2021, said Sthembile Mkhize, expatriate tax specialist at Tax Consulting SA.

Additional recommendations that appear to be aimed at ensuring consistency with the HNWI Unit include provisional taxpayers with business interests now being required to submit their assets (at cost) and liabilities in their tax filings each year.

This is aimed at assisting in the detection of non-compliance or fraud through the presence of unexplainable wealth.

Among the proposals are that provisional taxpayers with assets exceeding R50 million be required to declare specific assets and liabilities at market value in their 2023 tax returns, said Mkhize.

“This should not come as a shock, as financial experts have long cautioned that SARS has heightened its focus on wealthy individuals.”

SARS has previously declared that they have identified and profiled several HNWIs who live a “luxurious” lifestyle and have unexplained wealth relative to their claimed income. SARS has access to several databases that track high-ticket items such as luxury cars and expensive real estate.

“HNWIs should not underestimate SARS’ commitment, particularly if your lifestyle is incompatible with your declared tax information. This could result in dire consequences in accordance with Section 234 of the Tax Administration Act No 28 of 2011 or even in criminal prosecution,” said Mkhize.

Further driven by concerns around poverty, education, healthcare, energy supply and political stability, emigration has steadily increased in recent years, particularly among HNWIs and ultra-HNWIs.

Why the Isle of Man? 

South Africans working in medical, information communication technology (ICT), financial services, and a variety of other industries have found good synergies with IoM’s regulatory dispensation and economic strengths.

“Along with the appeal that the IoM does not apply income tax to inhabitants or non-residents, the highly diversified nature of the IoM’s economy has proved a favourable pairing with innovation-driven and highly-skilled South Africans,” Mkhize said.

The island has a customs arrangement with the UK that aids in commerce but ensures legal independence from both the United Kingdom and the EU.

The IoM’s financial services offering primarily comprises offshore banking, captive insurance, offshore life insurance, fund management, and trust and company services, said Mkhize.

“The island also has a clear and straightforward tax structure that encourages the accumulation and maintenance of wealth, economic stability, and security with a complete infrastructure of local and international law, accounting, as well as business services companies of the highest calibre.

“Nedbank, Standard Bank, Microgaming, and Derivco are just a few of the big South African corporations that have set up shop on the island.”


Read: Finance minister Godongwana on whether South Africa is a failed state



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