Re­lief, con­cern about new ex­pat tax pro­posal

The Citizen (KZN) - - PERSONAL FINANCE - Ingé Lam­precht

Stake­hold­ers have wel­comed Na­tional Trea­sury’s rel­a­tively softer stance on ex­pat tax, but there are con­cerns about the oner­ous process of claim­ing tax cred­its and the sig­nif­i­cant cost im­pli­ca­tions for some em­ploy­ers.

Trea­sury pre­vi­ously pro­posed that an SA tax res­i­dent work­ing abroad for over 183 days a year (of which 60 days were con­tin­u­ous) would in fu­ture be fully taxed in SA and only be el­i­gi­ble for a tax credit to the ex­tent that tax was paid off­shore. This could have had sig­nif­i­cant tax im­pli­ca­tions for some South Africans work­ing abroad, par­tic­u­larly those in low- or no-tax ju­ris­dic­tions.

Trea­sury con­firmed in Par­lia­ment that the pro­posal would be changed to al­low the first R1 mil­lion of for­eign re­mu­ner­a­tion to be ex­empt from tax in SA.

“Nor­mal mid­dle-in­come earn­ers, such as teachers, waiters and ar­ti­sans, work­ing abroad should then nor­mally be able to con­tinue to live and work over­seas with­out pay­ing South African tax,” says Bow­man’s Pa­tri­cia Wil­liams.

Tar­ryn Atkin­son of FirstRand Group says in fu­ture it’ll cost a lot more for em­ploy­ers want­ing to en­sure their em­ploy­ees in a for­eign coun­try aren’t worse off.

“It also then cre­ates al­most a bar­rier for peo­ple want­ing to in­vest in SA when they re­alise how high the em­ploy­ment costs are go­ing to be should you be send­ing any of your em­ploy­ees out­ward from SA.”

Atkin­son says SA hasn’t had a large take-up of the head­quar­ter com­pany regime; the pro­posed amend­ments could de­ter in­ter­ested par­ties.

There are also con­cerns about the oner­ous tax credit sys­tem – cur­rently al­ready used by tax­pay­ers on short­term as­sign­ments – and that a de­lay in claim­ing tax cred­its could ef­fec­tively lead to dou­ble tax­a­tion.It takes up to two years to get the cred­its al­lowed, says Beatrie Gouws at KPMG.

Off­shore ju­ris­dic­tions do not have the same tax year as SA and tax­pay­ers may not have a tax cer­tifi­cate from a rev­enue author­ity to prove a cer­tain amount of tax was paid. There are also con­cerns the R1-mil­lion thresh­old may be too low.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.