What SA expats can expect when the new tax law comes into effect in March

2020-01-21 04:45
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If you're a South African working and living abroad, make sure you've got your ducks in a row before 1 March 2020.

READ MORE HERE: Expat tax: Countdown to implementation kicks off

The changes to SA's expatriate tax exemption legislation will be coming into effect - and non-compliance will be met with a risk of prison time.

But according to Tax Consulting South Africa - who held some workshops over the changes in UAE and Qatar - there is still a consensus that many expats are rather burying their head in the sand than making plans for the new changes.

ALSO SEE: Expat tax debate: South Africans living overseas 'concerned about ever-growing tax liability'

What exactly has changed

In case you're one of those oblivious to the changes, the current Tax Act provides that if a South African is employed by either a local or foreign employer and renders services to them outside of South Africa for longer than 183 days in any 12-month period, being continuously abroad for 60 of those days, their remuneration earned during that time shall be exempt from taxation by the South African Revenue Service (SARS).

However, from 1 March there will be one big change - only the first R1 million earned will be exempt - anything above that will be taxed at a rate of up to 45%.

SEE: South Africans are throwing away millions in tax refunds while travelling abroad and this needs to stop!

What happens now

"It is imperative that South African expatriates get themselves acquainted with the law and how it will affect them and avoid being fish bait to the many dodgy investment and aggressive tax schemes being punted at them," advises Tax Consulting South Africa. 

One of the options open to expats is financial emigration - this is a process where you cease your tax residency in South Africa if you have permanent residence outside of SA or don't plan on returning at all. 

Another option is adhering to a Double Tax Agreement - an agreement between two countries to ensure that a taxpayer isn't unfairly taxed by two countries. This especially works for those uncertain about returning to SA. You can see the full list of countries South Africa has an agreement with here.

But one solution won't work for everyone - each individual case would have different requirements and needs, and your easiest solution would be to talk to a tax consultant to see which path would work out the best for you.

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