« Most of Africa is covered by double taxation treaties. However, if one couple is established in South Africa and one spouse works primarily outside the country in Africa and the other works in South Africa, both are most likely still considered residents of the tax SA, » he says. Double taxation treaties (« DBA ») are internationally agreed laws between South Africa and another country. South Africa has dozens of such agreements with different countries and the main purpose of a DBA is to ensure that each country subject to the agreement knows what its tax rights are vis-à-vis taxpayers. A DBA ensures that a taxable person is not unfairly taxed, both in South Africa and in the country concerned treated in a particular DBA. It therefore offers protection against double taxation and lays down various requirements that a taxable person must meet in order to understand where that taxable person is established as a tax resident. Please note that you work with a passport in South Africa and still meet the requirements if you are a tax resident in South Africa. Am I at risk of paying double taxation? In short, you do not pay double taxation. The purpose of double taxation treaties (SAAs) between two countries is to eliminate double taxation. This is good news, as it ensures that South Africans who work more than R1.25 million overseas still only pay the additional tax that the South African Revenue Service (SARS) can collect. In other words, if you pay taxes abroad, this tax can be deducted from the South African tax due on your foreign remuneration.
One of the factors to remember is whether there is a double taxation agreement (DBA) between South Africa and the country where you work, he notes. The amended South African Tax Act is now fully applicable from 1 March 2020. If you have international economic interests, your income may be taxable both in South Africa and abroad, resulting in double taxation. A widespread misunderstanding we see among South African expats is that they think they are « automatically exempt » simply because there is a double taxation treaty between the two countries. This is completely false and there are several factors that must be considered and demonstrated objectively, and you are still legally required to file a tax return and « claim » an exemption as part of the contract relief. Agreements between the two tax administrations of two countries should enable administrations to eliminate double taxation. The navigation area above allows you to access the texts of the corresponding agreements. Tax Consulting South Africa has been around for 17 years and is widely recognized as the leader in the expatriate tax. The group was commissioned by Barry Pretorius and South African expatriates worldwide to represent the Expatriate Group (« EPG ») in Parliament to fight the change in law that led to the release of R1.25mil, and also wrote the first expatriate manual of its kind published at the end of the year by LexisNexis. « People don`t think they have to make a comeback because he`s already been taxed, » Louw adds. A DBA becomes relevant to the circumstances of a taxable person where that taxable person receives income in South Africa and abroad, for example, or where that taxable person is established for tax purposes in South Africa (but has no income from a South African source) and receives income from a foreign source.
What has changed in the Income Tax Act? South African taxpayers who had worked more than 183 days abroad (60 of which were consecutive) were exempt from paying income tax on their foreign income. The amendment to section 10(1)(o)(ii) of the Income Tax Act has caused a great deal of confusion among South Africans who live and work abroad. . . .