South Africa’s big expat tax is coming

cguy

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so tax resident as in ordinarily tax resident - i.e. outside of the country for more than 183 days of the year (IIRC)? I wasn't sure if this legislation was changing that or not to blanket it irrespective of being 'ordinarily resident'?

It’s not changing. Although the requirements are already stricter than just 183 days out of the year. There is a geographic time based component and a subjective component (“where is your home”) that has to be met.
 

cguy

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Apparently we are all reading a different article or you guys seem to think that the expat tax law will consider the international tax first and then only apply the difference to make up for the 45% expat tax law. I would love to find out why you think that would be the case.

The purpose of the double tax agreement is to state which countries get what, and to avoid double taxation. It may not consider the international tax first (usually depending on where the tax payer resides), but the tax payer is never double taxed.


The SA government want their 45% (or up to 45%) of the expat income over R1 million (this seems to be the only caveat in the article), why do you think the expat tax law gives a damn if you already pay 41% overseas and then only will charge you the 4% difference ?

Because it’s the law, per DTA.

It states right in the article without the following so again how in the world do you read the following in context and come to the conclusion they will only take you the difference ?

"It states that South African tax residents abroad will be required to pay tax to South Africa of up to 45% of their foreign employment income, where it exceeds the R1 million threshold."

It says “up to”, which would only be 45% if the country charged no tax at all.

My earlier example stated someone earning 10000euro a month before any tax in whatever country they now live and work. Thats 120000euro a year or just shy of R2million a year. This new tax law will screw you on at 45% on everything above the R1million mark which is 50% of your yearly salary as it is in this example.

Sure it seems that if you are a pisspoor earner overseas taking home under R1million a year worth this new law might not affect you or it is not made clear in the article how it would affect the lower earners.

Apart from ignoring progressive taxation - it’s about effective tax rates, not marginal tax rates, also there won’t be double taxation. Furthermore, this only applies to SA tax residents, so it’s no where near as widely applicable as you seem to think.
 
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Scooby_Doo

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Apparently we are all reading a different article or you guys seem to think that the expat tax law will consider the international tax first and then only apply the difference to make up for the 45% expat tax law. I would love to find out why you think that would be the case.

The SA government want their 45% (or up to 45%) of the expat income over R1 million (this seems to be the only caveat in the article), why do you think the expat tax law gives a damn if you already pay 41% overseas and then only will charge you the 4% difference ?

It states right in the article without the following so again how in the world do you read the following in context and come to the conclusion they will only take you the difference ?

"It states that South African tax residents abroad will be required to pay tax to South Africa of up to 45% of their foreign employment income, where it exceeds the R1 million threshold."

My earlier example stated someone earning 10000euro a month before any tax in whatever country they now live and work. Thats 120000euro a year or just shy of R2million a year. This new tax law will screw you on at 45% on everything above the R1million mark which is 50% of your yearly salary as it is in this example.

Sure it seems that if you are a pisspoor earner overseas taking home under R1million a year worth this new law might not affect you or it is not made clear in the article how it would affect the lower earners.


In reference to my example, I am using the following statement which is part of the rule. I am open to being corrected if I am miss-understanding it.

  • If so taxed on remuneration exceed R1 million, the tax resident will be able to claim a foreign tax rebate with SARS, alternately, the taxpayer can rely on the various tax treaty benefits.
 

GoB

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So what are you peeps doing with your SA pension funds when you emigrate?

My pension savings is not that much... which is good since the tax is ~20% on the first R1m, 36% after that.

Take cash and start over. I still have to find out whether I can simply cash out upon resignation or whether I need to wait for financial emigration to avoid any penalties.
 

John Tempus

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In reference to my example, I am using the following statement which is part of the rule. I am open to being corrected if I am miss-understanding it.

  • If so taxed on remuneration exceed R1 million, the tax resident will be able to claim a foreign tax rebate with SARS, alternately, the taxpayer can rely on the various tax treaty benefits.

Foreign tax rebate only makes sense if you are already paying a foreign tax. You cant get a rebate on something you do not pay. That rule seems to suggest only discounts or reductions in some form on what you are already paying as an expat tax.

I guess like everything we will see the law written out in 2020 but it will be written in a way to fk expats and that is the main issue here that some people seem to dance around in order to just say "No" , "You are wrong".

This expat tax suggestion is not something that is meant to make your life easier, it is designed to screw you and take more from you.
 

cguy

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Foreign tax rebate only makes sense if you are already paying a foreign tax. You cant get a rebate on something you do not pay. That rule seems to suggest only discounts or reductions in some form on what you are already paying as an expat tax.

I guess like everything we will see the law written out in 2020 but it will be written in a way to fk expats and that is the main issue here that some people seem to dance around in order to just say "No" , "You are wrong".

This expat tax suggestion is not something that is meant to make your life easier, it is designed to screw you and take more from you.

It is already written out. The foreign tax rebate is a rebate for foreign taxes paid (surprisingly...). The expat tax is designed to close a bit of a loophole, where people work remotely, still reside in SA to some degree, yet don’t pay taxes to SA.
 

Zukat

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Can someone please explain how will this work? How will SARS find out if im working or not overseas and what is my salary to enforce me to pay their %?
 

Jola

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I'm one of those who pretty much just left. I did file my tax return for the tax year I was still in SA and earning there, then never again.

Erm....this has me pondering.

If you are already a permanent resident overseas by 1 March you should be fine.

Just stay away for as long as possible for the first SA tax year.
 
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