SARS have also shown very little mercy to SAFFAS abroad, and we have seen more aggressiveness in revenue collection and penalties for non-compliance.
The questions often raised by many South Africans working abroad is “How will SARS find me? However, SARS started a dedicated ‘Foreign Employment’ unit to execute on the mandate to target expats and this, in most cases, triggers an audit on the taxpayers affairs.
As part of our wider service offering, we will conduct a comprehensive tax calculation to ensure you know your exact tax liability so that you can plan for the first Provisional Tax payment due end August 2021.
The implementation of the amendment to Section 10(1)(o)(ii) (Known as the Expatriate Tax Law Amendment) of the Income Tax Act finally came into effect on 1 March 2020. With much uncertainty around the change, we have consulted with both individual expats and some of the larger corporate groups employing SA expats in places such as Africa and the Middle East to raise a corporate awareness therefrom.
The common request from these consultations is the need to see one’s tax obligating taking into salary, fringe benefits and tax paid in host country. The value of this exercise is being able to compute the possible tax liability and thus allowing for in-depth planning to mitigate / nullify the impact of any exposures, especially where one’s income exceeds the R1.250million threshold.
As such, we have developed a bespoke baseline calculator that is:
With the necessary planning and adjustments, you as an employer can prevent the devastation of losing key resources as a consequence of the coming law changes. As an individual, you can plan your affairs and apply various tax relief mechanisms such as applying a DTA, financially emigrating (FE) or advanced tax planning in cases where DTA and FE is not possible and whether a foreign tax credit can assist in reducing this ultimate liability for the affected expatriate.
– Mariana Stander, Managing Partner of Remuneration Consultants.
Anyone who has been sharply following the SARS expatriate tax law change will know that expatriates are being earmarked for aggressive targeting.
They would also know SARS started a dedicated ‘Foreign Employment’ unit to execute on this mandate, but what happens when you are on their radar and the audit commences?
On an audit request dated 02 November 2020 from SARS, the following questions/requests were posed to the expatriate filing the return:
The questions speak for themselves and will be a reality check for those who have been putting off dealing with their tax obligations decisively, or who followed the ‘quick and easy’ solutions, which leave room for maximum risk and little protection in the long run.
Unfortunately, expatriates were forewarned on being compliant, and with SARS’ recent inclusion of the words ‘wilfully or negligently’ in the Tax Administration Act, one cannot take these questions lightly when responding nor plead ignorance after the fact; the consequence of which include imprisonment or a hefty fine.
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With the first provisional tax payment being due on 31 August 2020, there is some confusion regarding whether expatriates should be provisional taxpayers or not.
EXPATRIATE TAX TEXTBOOK
Effective from 1 March 2020, the new legislative amendment states that South African tax residents abroad will be required to pay tax to South Africa of up to 45% of their foreign employment income, where it exceeds the R1m threshold.
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Having just returned from visiting South Africans in remote locations in the Democratic Republic of Congo, Zambia, Oman, Qatar, Saudi Arabia and the UAE, one gains an appreciation for expatriates living in these locations.
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