How will the 2020 tax law effect South African expat’s foreign employment income tax exemption?
Currently, South Africans who are earning income abroad are assessed in terms of residency. If you are working overseas and do not meet the physical presence requirements to be an ordinary resident in South Africa, you are exempt from tax on any foreign income. To qualify for this exemption, an employee (not self-employed) needs to have spent more than 183 full days (including a continuous period of more than 60 full days) outside of the country working, in any 12-month period. If this requirement is not met, then you are taxed on worldwide income.
From 1 March 2020, this foreign employment income tax exemption will only apply to the first R1.25 million of the foreign employment income, subject to the same criteria. Foreign employment income of more than R1.25 million will be taxed according to the standard tax tables for individuals, less an adjustment for any foreign tax paid.