The global trend of skills migration has resulted in numerous positions becoming vacant in South Africa. This means that foreigners with the desired skills are next in line to climb the company ladder, which makes residing in South Africa much more appealing. The Department of Home Affairs (“DHA”) has also announced that it will be opening its doors to permanent residence permit (“PRP”) applications from January 2022. If you are a skilled foreigner on assignment in South Africa, there has never been a better time to apply for your PRP.

Applying for permanent residency is an incredible undertaking. Because it affects not only the applicant but their entire family, it could be the biggest decision of their life. It is important to wrap your head around the finer points before applying for permanent residency.

The advantages to becoming a permanent resident

As a PRP holder you will be able to permanently live and work in South Africa without needing to renew your visa every time it reaches its expiry date. You will have the right to engage in business, own property, study, travel in and out of South Africa, and do all activities that a citizen is permitted to do. You will further be able to apply for a South African national identity card, which is helpful when you need to rent property, buy a car or open a bank account. While a PRP has no expiration date, you must be resident or physically present in South Africa at least once every three years. A permanent resident permit will not jeopardize your citizenship in another country.

Unfortunately, being a permanent resident in South Africa does not entitle you to South African citizenship, which means you will not be able to vote in local elections. Citizenship is an entirely different application process with different requirements. You will also not be able to apply for a South African passport.

Types of permanent residency

There are numerous categories under which to apply for a PRP. As with any other permit, the applicant is subject to the conditions of the chosen category the permit was issued under. For example, if you obtain permanent residency through retirement, then you must prove that you have no intention to work in South Africa. You would also have to prove that you are financially able to retire.

When do you qualify for permanent residency?

You must have lived in South Africa as a worker with five years of continuous work permits before applying for a PRP. It’s important to note that you will never automatically qualify for permanent residency after living in South Africa for five years.

Foreigners might qualify for direct residency in special circumstances where they:

• Have critical skills or qualifications that are in short supply in South Africa
• Want to open their own business or invest in an existing business in the country
• Wish to retire and can prove that they are able to sustain themselves
• Obtained a permanent job offer in South Africa
• Is financially independent and does not need to work for a living

Holders of a Critical Skills Visa or a skill/qualification listed on the Critical Skills List, who also have a permanent offer of employment, have a first-mover advantage in seeking appropriate immigration advice. This will ensure that all the necessary steps are taken to submit their PRP application before January 2022, thereby avoiding the long lines.

Spouses, dependents or close relatives

A direct permanent residence permit is obtainable to the spouse or life partner of a South African citizen or permanent resident. They would, however, be required to demonstrate that they have been in a relationship for at least five years, either through cohabitation or a legal marriage certificate. 

Legal dependents of a South African citizen or permanent resident, which include children under the age of 18, as well as relatives meeting the first level of kinship, may apply for a PRP.

Application process

Permanent residency can only be obtained through a formal, and sometimes cumbersome, application process, which could take anything from 6 to 12 months before being approved. It should be noted that each application will undergo scrutiny by the DHA. Applicants are vetted and processed impartially to determine whether they will contribute to the South African economy.

Approval is subject to the applicant meeting the prescribed criteria in the Immigration Act. If you are classified as a prohibited person or declared undesirable, you must submit a detailed motivation why you should not be denied approval. In the event where documents are missing or incomplete, the process can be delayed even further.

There are many finer points to consider when applying for a residency permit. For example, it is advisable to be present in South Africa when applying for a PRP. You must never apply for permanent residency when you are in South Africa on a temporary tourism visa.

South African tax: a word of caution

The South African tax system is a residence-based system, meaning your tax obligations will be determined by your residency status. If you are considered tax resident, you are liable for tax on your worldwide income, whereas non-residents are only subject to tax on South African sourced income. 

You are considered a tax resident when you are “ordinarily resident” or have sufficient physical presence to trigger residency. In terms of the former, you will be considered resident if objectively viewed you treat South Africa as your real and permanent home. The physical presence test is measured over a six-year period and applies if you are physically present in South Africa for more than 91 days in total in the sixth and previous five tax years and more than 915 days in total during the previous five tax years. 

Critically, if you apply for a PRP, you effectively declare that you intend to reside in South Africa permanently, which will trigger residency under the “ordinarily resident” test. Therefore, while permanent residency may appear to be a good idea from an entry standpoint, it may be considered a less favourable choice from a holistic planning standpoint. An immigration specialist with a keen understanding of the fiscal aspects of South Africa, should be able to advise on tax planning as part of their service.

To avoid the potential pitfalls when applying for a permanent residence permit, it is important to seek advice or assistance from an immigration specialist who is well-versed in the South African visa or permit application processes, as well as the South African taxation system.

Written by Xpatweb & Tax Consulting SA