Amendments to the Income Tax Act will soon see all South Africans working outside the country’s borders contribute to the fiscus from 1 March.

Currently, South Africans working outside the country’s borders for more than 183 days are exempted from paying tax to their home country. The amendment will now see a cap of R1 million, which means that everything earned from R1 million is no longer exempt and is actually taxable in South Africa.

Does this mean expats will have to pay twice – in their home country and in their country of employment? Joanne Joseph spoke to Tax Consulting SA’s legal manager of expatriate tax Jonty Leon to find out more.

You have to look at each situation. In certain countries we do have double taxation agreements between South Africa and that foreign jurisdiction and in those instances where you can meet the requirements, you are able to ensure that you are not double taxed.

Leon says some South Africans are in a catch-22 situation and may opt to move back home while others may cut all ties with the country. He lists some of the other options South Africans abroad may have.

Financial emigration formalises your status as a non-resident for tax and exchange control purposes and as a non-resident, you are not taxable on that foreign income. That’s one of the big options.

Another big one is making use of a double taxation agreement where there is one in place with the foreign jurisdiction. There are also certain requirements that need to be met for that.

To meet one of the requirements you can’t have one spouse living in South Africa and the other in the foreign jurisdiction.

Source: Radio 702

Understanding South African Expat Tax




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