Residence Based Tax

[bluebirdy]

Hey guys, I'm trying my best to understand the qualifications for paying tax if not living in the country for a considerable part of the year. I was under the impression that the rule was quite straightforward unfortunately I've come across a few things that have confused me on SARS website - https://www.sars.gov.za/ClientSegme...ages/Tax-and-Non-Residents/Pages/default.aspx and the linked document https://www.sars.gov.za/AllDocs/Leg...finition natural person physical presence.pdf

The rule as I understood it was that I would not need to pay income tax in South Africa if I am in the country for less than 183 days in a 12 month period. I would also need to spend a continuous period of more than 60 days out of the country. Is it really as simple as that or is there more to it? If I move from country to country and end up only spending around 150 days in South Africa during the financial year would I be legally within my rights to not pay SARS. I'm also aware that in the next financial year the government will be taxing expats on income above R1 million.

I create digital templates for an app sold online and am considering the E-residence visa offered by Estonia - https://e-resident.gov.ee/become-an-e-resident/. My plan is to work remotely around the world and obviously if I can I'd prefer to not pay SARS if I'm within my rights not to.

Does anybody have experience doing a similar thing? or if anybody can point me in the direction of a relevant tax expert I'd really appreciate it.

 

[My_King]

I would just not pay TAX.

 

[deweyzeph]

DANIEL BAINES: Tax residency implications for South Africans living abroad

Currently, a South African tax resident is exempt from paying tax in SA on any money earned as an employee overseas if you are out the country for 183 full days in a 12-month period (of which at least 60 of those days must be consecutive).

www.businesslive.co.za

 

[smc]

It's.......murky. But be aware that generally until such time as you break your tax residency in South Africa, you are still tax resident. To break your tax residence typically requires that you become tax resident somewhere else. "Somewhere else" can be a low or zero tax location, but must be somewhere, and you might have to prove it. Citizen of the world probably won't work.

 

[^^vampire^^]

If the money is coming into your SA bank account then best believe they have the means to come get your money. If you can claim residency elsewhere and the money comes into a bank account elsewhere there is very little they can do. There are silly caveats like SA deems you a tax resident if you were a tax resident in the last 5 years etc but honestly unless you are present in the country and/or money is flowing into the accounts in the country they can get ****ed. I have rental property in SA and that's all I lodge. They never have and never will learn of the money I earn outside of the country especially since I no longer live there.

In my opinion if the business & money is kept outside of SA borders then you should be fine. If anything occurs within SA then it should be reported and tax paid there.

 

[deweyzeph]

If the money is coming into your SA bank account then best believe they have the means to come get your money. If you can claim residency elsewhere and the money comes into a bank account elsewhere there is very little they can do. There are silly caveats like SA deems you a tax resident if you were a tax resident in the last 5 years etc but honestly unless you are present in the country and/or money is flowing into the accounts in the country they can get ****ed. I have rental property in SA and that's all I lodge. They never have and never will learn of the money I earn outside of the country especially since I no longer live there.

In my opinion if the business & money is kept outside of SA borders then you should be fine. If anything occurs within SA then it should be reported and tax paid there.

Unfortunately these days there is a lot of co-operation between SARS and HMRC. If HMRC thinks you owe them money and you're based in SA they can and do get SARS do their dirty work for them to get their money. Likewise if you go back to the UK and haven't settled your SA tax affairs, SARS has got the power to ask HMRC to claim that money back from you. Don't underestimate the reach of a governments' revenue services. They are all co-operating with each other on a global scale now.

 

[^^vampire^^]

Unfortunately these days there is a lot of co-operation between SARS and HMRC. If HMRC thinks you owe them money and you're based in SA they can and do get SARS do their dirty work for them to get their money. Likewise if you go back to the UK and haven't settled your SA tax affairs, SARS has got the power to ask HMRC to claim that money back from you. Don't underestimate the reach of a governments' revenue services. They are all co-operating with each other on a global scale now.

I definitely don't doubt there ability to get money across borders, but they do need to firstly suspect there is something awry and secondly it needs to be enough to make it worthwhile to chase after you.

That being said it is unlikely any tax agency within a given country is going to do more than the work it takes to retrieve money owing to themselves and hence are unlikely to do the work of another countries tax agency unless specifically asked. Because of this I said if the money never enters a south african bank account you should be in the clear. If you are a tax resident of a certain country then you should be reporting your tax and doing the right thing but when SARS starts playing games like they will take tax over and above a certain threshold that is taxes elsewhere they can go get ****ed.