What does the proposed 2020 tax law mean for SA expats?

From 1 March 2020, South African tax residents abroad will be required to pay tax to the South African Revenue Service (SARS) of up to 45% of their income earned outside South Africa (including fringe benefits) if it exceeds a R1.25 million threshold. For the first R1.25 million to be exempt, a SA expat must be:

  • a South African tax resident
  • employed and earn an employment income through an employment contract (and not, for example, be self-employed)
  • 183 days outside of South Africa during a 12-month period, from which 60 days are continues.

You have to adhere to all the above criteria, otherwise you will be taxed on your worldwide income, unless you are a non-tax resident of South Africa.

With the proposed 2020 tax law, SARS wants to focus especially on those expats who have left South Africa and simply decided to ignore their taxes. While some did not submit any tax returns in South Africa, others submitted zero-tax returns to SARS. Some expats even indicated that they were unemployed on their tax returns while earning expatriate salaries. SARS has the option to imprison offenders up to a period of two years.

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