We are fast approaching the implementation of the amendment to Section 10(1)(o)(ii) (Known as the Expatriate Tax Law Amendment) of the Income Tax Act, which is set for 1 March 2020. The legislative amendment states that South African tax residents abroad will be required to pay tax to South Africa of up to 45% of their foreign employment income, where it exceeds the R1m threshold.
This has left expatriates sweating on how this will affect their affairs, particularly with no provision made for fringe benefits (such as housing and security), thus exposing their entire package once the change takes effect. Similarly, employers of outbound expatriates are exploring various mechanisms to ensure their outbound employees are not affected.
To allow for sufficient preparation and planning, our expatriate tax and remuneration specialists have designed a fully-fledged, easy-to-use “expat tax” calculator. This will allow both employers and individual expatriates explore their tax obligation post March 2020. The calculator provides flexibility for selecting your own currency and exchange rates and allows for the comparison of pre-March 2020 versus post-March 2020 to get a good view of your position for future planning.
The calculator takes into consideration the current legislation whereby if one meets the requirements of the expat exemption.
Prior to 1 March 2020, all foreign earned employment income were exempt from tax in South Africa when meeting the requirements as stipulated in the Income Tax Act.
The calculator also determines your estimated tax liability taking into account the amended expat exemption legislation from 1 March 2020 whereby only the first R1 million can be exempt if the requirements are met, and will take into consideration possible foreign tax credits, on tax paid in the foreign jurisdiction.
Access to the calculator is free of charge. Should you require detailed consultation after use, please send an email to email@example.com or call +27 11 467 0810.