If you are one of the many South Africans working abroad and not paying income tax on your foreign earnings in South Africa under the 183-day rules, read on……
If you are still a South African resident for income tax purposes, 1 March 2020 was an important day for you. As of this date, the “expat tax” is in effect, whereby only the first R1.25m of your foreign earnings will be exempt. Previously all foreign earnings were exempt, provided the 183-day rule (and more) were satisfied. Initially set at R1m, this exemption was revised in the 2020 Budget and is now capped at R1.25m.
Under the new expat tax, all of your foreign earnings, including fringe benefits such as housing, education and flight allowances, will now be taxed under the individuals’ income tax tables for the year, and can go as high as 45%. For individuals working in tax-free geographies, such as Dubai, this will have significant implications for your pocket.
What options do you have if you are in this situation?