South Africa Scrambles to Keep Its Expats This view was shortsighted and has come back to haunt government as South Africans have in many cases chosen to financially emigrate and thus cease their tax residency with South Africa to avoid the expat tax. The response from government at that point was that the formalization of non-residency in those cases was to be encouraged. With National Treasury, stakeholders pleaded with government and warned in no uncertain terms that implementing this change in legislation would lead to an accelerated cessation of tax residency. The exemption at that point was capped at R1 million, meaning that South African tax residents earning foreign employment income above this threshold would no longer be exempt from tax in South Africa, from the effective date of 1 March 2020.Īt every point from the proposal of the amendment to the expat tax, to the promulgation of it into law, and thereafter at various workshops This has widely become known as the “expat tax”. In December 2017, the change to the foreign employment income exemption was promulgated into law. We will see a new verification process with regards to remuneration earned abroad and offshore transfers which allows identical treatment of natural person emigrants and natural person residents. Government has proposed to phase in a new exchange control treatment as from 1 March 2021 which is also aimed at reducing the increasing emigration rates. These changes have caused numerous South Africans to cut ties with the country and it now appears that the government aims to change their approach.Īlthough it appears that this may bring relief to South African tax residents abroad, the additional R250 000 is mainly wiped out by the effect of the weakening Rand and fringe benefits which will inflate their total package. This comes after the initial amendment which was promulgated in December 2017 that capped the exemption at R1 million. What was originally a full exemption under Section 10(1)(o)(ii) is now limited to R1.25 million from 1 March 2020 following Tito Mboweni’s 2020 Budget Speech. APPROVAL FOR INTERNATIONAL TRANSFER (AIT) APPLICATIONįoreign remuneration has experienced quite a lot of attention in the past 3 years.Call for interest: South Africans living in the Isle of Man.Remuneration Structuring / Salary Structuring / Compensation and Benefit Best Practices.Cost To Company Conversion Flexible Benefits. Package Structuring Tool with Flexible Benefits.Hassle-Free And Convenient Customs And Excise Duties.When SARS Unlawfully Help Themselves To Your Bank Balance.General Questions on Double Tax Agreements.General Questions on Financial Emigration.
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