South Africans living in the UAE (Dubai) or Quatar (Doha) not paying South African tax on their foreign earned salary, in most cases will remain tax resident in SA.
The 183/+60-day rule only speaks to the (partial) exemption of remuneration from employment. South Africans will continue to pay SA tax on worldwide income from all other income, including most retirement fund income albeit that the retirement fund is foreign based. Immigrant South African may enjoy some limited tax exemption on foreign pension, yet the SA retirement funds will indeed pay SA taxable retirement benefits, albeit that contirbutions were made from tax exempt foreign employment income.
Because of the 2020 tax year changes, allowing SA taxpayers residing and working in say UAE, Germany, USA and most other countries, will no longer enjoy full tax exemption on all their foreign sourced salary. In fact, as of 1 March 2019, the taxpayer’s tax exemption will be capped at R1m per tax year. This aligns the SA system with that of the USA.
Many expats now rush to tax emigrate from South Africa, all in an attempt to save the SA tax on the foreign income. In doing so the taxpayers may indeed trigger capital gains taxes on the tax exit placed on record, so late in the relocation process.
Have question on foreign earned income? Contact Hugo van Zyl.
1 comment on “South Africa Tax: Tax Free Salary Does Not Equate To Tax Non-Resident”
I am completely opposed to taxing income earned from foreign sources. I know it is the norm in most countries. Those who venture abroad and work to earn a living should be left alone from taxation. They nevertheless bring their money back home and spend it locally paying all other taxes. Governments do not provide incentives to help persons in this area. It is a sacrifice that people make to go abroad and earn. Leave them alone is my plea.
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