New expat tax changes for South Africa

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Under pressure to meet tax revenue quotas the tax authority has started auditing the country’s non-compliant expatriates in earnest.

It may come as a shock, especially for individuals who hoped to renounce their tax payment duties in South Africa by moving and earning a living abroad.

Jonty Leon, legal manager at Tax Consulting SA, states: “We have been warning expatriates that this was coming and now that it’s here, the time for hiding one’s head in the sand is over,”

Individuals intending to relocate to another country should follow the formal exit procedures and ensure their tax affairs are in order. The formal financial emigration process is being changed and a new more stringent regime will be implemented from 1 March 2021.

Whether a South African must declare their worldwide income and pay tax on it to SARS is determined by their tax residency status, not their physical location or period outside the country. – extracted from BusinessTech News

The amendment requires South African tax residents abroad to pay South African tax of up to 45% of their foreign employment income (where employment income includes allowances and fringe benefits paid to expatriates that cannot be considered as “earnings”) in the event that it exceeds the threshold of R1.25 million.