TAX ON OFFSHORE INCOME – A CHANGE IN PLAN
Category LawDotNews
TAX ON OFFSHORE INCOME – A CHANGE IN PLAN
(DotNews, republished with permission)
SARS recently issued a draft Tax Bill which proposed taxing South African residents the difference in taxation on offshore income earned. Thus, if 10% tax was paid on overseas income then the taxpayer was liable to pay what would have been due in terms of local Income Tax law (the maximum income tax rate here is 45%).
After an outcry from civil society and a vigorous consultation process, SARS is now planning to impose tax only on amounts received in excess of one million Rand. This is a welcome concession. Thus, if you earn R1.1 million offshore, your South African tax liability will be on the excess of R100,000. What is still not clear is whether and to what extent the foreign tax credit system will be simplified and improved to ensure ease of tax compliance.
Remember that you must have been out of the country for 183 days in the year with at least 60 of these days being consecutive to qualify for the exemption in South Africa.
SARS also intend to introduce this amendment from April 2020 versus April 2019 per the original draft legislation; the delay gives employees time to prepare for the changes.
The Bill has been tabled before Parliament and is anticipated to be finalised by year end. Once issued, the legislation will give more legal certainty on the way forward.
Author: DotNews
