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Much has been written about South African expats working overseas and yet there is still uncertainty relating to the tax treatment.

South Africa, similar to more than 130 other countries, follows a residence-based tax system

for individuals, this means that residents would be subject to tax on worldwide income (excluding certain exemptions or exclusions). Non-residents would however be subject to tax on income from a source within South Africa. Residency in general means where you live and should not be confused with tax residency.

Determining one’s tax residency status is thus of vital importance, an individual is a resident for tax purposes either by way of ordinarily residence or physical presence.

The global workspace has caused that many South African tax residents are rendering

services outside of South Africa and unless you change your tax residency status to that of

another country, you must declare the foreign income earned to the tax authority in South

Africa. Most taxpayers have therefore been applying the foreign employment income

exemption for many years and are thus aware of the legislative requirements to qualify for

this exemption.

A big change to this exemption however, occurred for years of assessment commencing on

or after 1 March 2020, whereby only the first R 1.25 million of foreign employment income

earned by a tax resident will qualify for exemption. Residents will still need to observe the

183 and 60 full days requirements to qualify for the exemption. It is therefore important to

note that foreign employment income above the R 1.25 million exemption will be taxed in

South Africa by applying the normal tax tables for the year of assessment.

One should take note that it is possible for double taxation to occur when dealing with

foreign income. In such a case, South Africa will provide double tax relief in the form of a

foreign tax credit / rebate, this is only when tax was paid in both countries, subject to certain


It is recommended to consult a tax professional when applying such an exemption to ensure

that it is correctly applied and ultimately assists in reducing the overall tax liability due to


The SGN Konsult Team.


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