Expat Tax & Residency

Expat Tax & Residency

From March 2020, South African residents working abroad may find they face a tax bill here in SA. Momentum Wealth has produced a very useful article that tells you all you need to know. Here’s an extract:

South African tax residents working abroad are thinking twice whether to remain a South African tax resident or not. This is after the amendment of the foreign employment exemption in section l0(l)(o)(ii) of the Income Tax Act in 2017, an amendment that limits this exemption, commonly referred to as “Expat tax”.

The effective date of the amendment is 1 March 2020.

Why the change?

The exemption was introduced in 2001 to eliminate double taxation when a South African taxpayer works abroad. At the time the country didn’t have many double taxation agreements (DTAs) with other countries, but currently there are 78 DTAs and so the risk of double taxation is much lower.

One of the main driving forces behind the amendment was the double-no-taxation instances that arose where a South African tax resident works in a tax-neutral jurisdiction and therefore no tax being paid in the host country and no tax paid in South Africa.

The amendment focusses mostly on the person working and earning an income abroad, but doesn’t contribute to the tax base supporting the life that their family –  who remains in South Africa – enjoys.

The current position

South African tax residents working abroad enjoy an income tax exemption for all foreign employment income earned abroad. This is the case as long as they are physically outside the country for more than 183 days during any 12-month period, of which more than 60 days are consecutive.

Click here to read the full article.

  • 15 Apr, 2019