With effect March 2019, the South African Government is planning to change the taxation laws for ‘tax residents’ living and earning outside of South Africa.

For the past 16 years, South African law stated that if a ‘tax resident’ is working abroad for more than 183 days a year and 60 days of those are consecutive, they do not have to pay income tax in their home country.

Currently, changes to this ‘tax exemption law’ are being proposed by the National Treasury.

In short, these draft amendments include:

  • Date of implementation – 01 March 2019
  • If tax is being paid in a foreign country where they are working, the South African will continue to abide by the tax law submissions of that country
  • Submission of tax returns in South Africa, disclosing all monies earned abroad and what taxes have been paid, will be mandatory whether or not they are currently paying tax where they are employed
  • The currency earned will be converted to South African Rand (ZAR), and the tax due on the salary will be calculated against the South African Revenue Service (SARS) tax tables
  • If the resident is paying tax in the country they are residing, the tax difference paid there will be deducted off the percentage owed in South Africa
  • If, as in the case in the UAE and many Gulf states, the salary is not taxable, the full % tax as stated by SARS, will be applicable
  • The tax returns will apply to all South African permanent residents and citizens, however long they have worked abroad
  • SARS will not entertain tax relief/deductions for expenses like other taxes paid; property rental; flights to and from South Africa; children’s education; transport and living costs etc.

The biggest concern that the majority of South Africans living in the UAE or Gulf states have, is that their salary is based on local living costs. Between what they earn in the region and the South African Rand conversion, it is just not comparable. This independent report on cost of living Dubai vs Johannesburg gives an example: Expatistan

Our suggestion is that the HR Department invites an expert into the Company to present the situation as it is now and what is likely to happen. Invite all South Africans on staff to attend, be informed and ask questions around their concerns. Please email us if you need a referral to a consultant.

Extra reading:

Tax Consulting South Africa


International Adviser

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