Exemption on earnings outside SA to be scrapped
The Treasury has proposed to remove the foreign employment income tax exemption for South African residents working abroad from March 2019. Treasury deputy DG Ismail Momoniat said the aim was to make sure that the tax system was fair to all and that people did not exploit offshore tax havens.
A Business Day report says the proposed measure is contained in the Draft Taxation Laws Amendment Bill of 2017, which has been released for public comment together with the Draft Tax Administration Laws Amendment Bill. The two Bills – together with the Draft Rates and Monetary Amounts and Amendment of Revenues Laws Bill published in February – give effect to the tax proposals announced in the Budget.
The Treasury and SARS plan to hold workshops on the draft proposals and Parliament’s Finance Committee will also hold public hearings on the Bills. Treasury’s Yanga Mputa said the exemption was introduced to alleviate the tax burden, but the Treasury had found situations where income tax was paid neither in SA nor in the foreign country.
The withdrawal of the exemption would mean tax would be paid on worldwide income in SA whatever the length of time abroad, though tax credits would be recognised for foreign taxes paid.
Article disclaimer: While we have made every effort to ensure the accuracy of this article, it is not intended to provide final legal advice as facts and situations will differ from case to case, and therefore specific legal advice should be sought with a lawyer.
