Tax deal great news for SA expats in Dubai

A new double-tax agreement between South Africa and the United Arab Emirates (UAE) may offer reprieve for South Africans working there if National Treasury’s proposal is accepted.

The proposal, which could see South African tax residents who work in places with favourable tax jurisdictions for more than 183 days a year and who currently don’t pay tax in these jurisdictions or in South Africa, taxed in South Africa, has been a major source of worry.

Cor Kraamwinkel, international tax partner at PwC, says the tax treaty between South Africa and the United Arab Emirates came into force in November last year.

He says a South African working and living in Dubai will likely have been sponsored by a local employer and will have entered Dubai on a sponsored work visa.

Subject to procedure, such a visa may entitle the person to a UAE tax residency certificate. Many South Africans working in Dubai may have left SA with the intention to work in Dubai for a few years, but to return to SA and for tax purposes they will still be regarded as SA tax residents. Due to the UAE tax residency certificate, they will however also be a tax resident in the UAE.

SA tax law regards individuals as SA tax residents if they are “ordinarily residents” in the country, unless they are exclusive tax residents of another country for purposes of a double-tax agreement, he adds.