10-06-2026 11:08:41 (GMT +02:00) Pretoria / Cape Town, South Africa

Expat tax is ultimately fair - expert
24. Mar. 2019 Fin 24

The changes will come into effect on March 1, 2020 and have been a
cause of concern for many South Africans working abroad who
currently pay no tax if they meet certain criteria. When the
changes to the act come into effect, however, only R1m of this
income will be exempt from tax in SA.
She points out that the impact of the changes is likely to be felt
the most by South Africans working in tax havens. Many of these
tax havens have high levels of indirect taxes such as VAT, but no
payroll tax.
`Let`s look at this without the emotion attached. If an expat is
earning money outside SA; but still owns property, has a family
who lives here and wants to be seen as a South African; it is
realistic for such a person to be required to pay some level of
direct tax,` says Dudley.
In her view, the R1m threshold is reasonable considering the tax
thresholds enjoyed by employees working in South Africa.
`Admittedly, most affected taxpayers are probably earning hard
currency and the current weakened rand will to some extent, negate
the impact of the R1m exemption. But expats do need to be taxed in
some way,` says Dudley.
`If an expat is already paying direct tax in another country, then
the effect of the new SA tax may be mitigated by tax paid
elsewhere in terms of a double tax agreement with possible minimal
effect.`
Dudley is of the view that Treasury is more likely to be targeting
individuals such as pilots or oil rig workers who effectively
retain a base in SA, but who work for an offshore company.
Until now, these individuals were exempt from paying tax in SA,
despite enjoying the benefits of their families living in the
country.
Another possible problem scenario she highlights relates



 

to people
who left South Africa years ago, although they have not
financially emigrated. They may no longer be regarded as tax
resident in SA because they have been living abroad for such a
long time.
She points out that it is also worth noting the impact of cross-
border information sharing on the implementation of expat tax
changes.
Since expats have always been required to complete a tax return in
South Africa, even if they were exempt from paying income tax on
foreign employment income, this information is already available
to the SA Revenue Service (SARS).
On top of that, due to information sharing between countries and
banks, SARS will know exactly how much is paid into anyone`s bank
account.
`Information sharing agreements were specifically noted by Finance
Minister Tito Mboweni in his 2019 National Budget as a key focus
area for fixing SARS and tightening the tax net,` cautions Dudley.
`This means expats too will increasingly be on SARS` radar,
underlining the importance of ensuring that your affairs are in
order and in compliance with these new proposed amendments.`
Fin24 reported earlier that, despite hosting a workshop recently
where they were given feedback from experts in the financial
industry, National Treasury and SARS are not budging on an
amendment to the foreign income tax exemption.
Jonty Leon, a tax attorney at Tax Consulting SA, tells Fin24 one
major point of contention is the taxation of certain fringe
benefits. `That means the exemption of only R1m stays and at the
same time fringe benefits and allowances will become taxable.` V.2816

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