Working overseas and your Tax obligations – If you’re thinking about working overseas, it can be an exciting opportunity to gain professional experience and immerse yourself in a new culture. However, it’s essential to understand the tax implications of working in a foreign country. In this blog post, we’ll explore the basics of working overseas and how it can affect your taxes. Let’s begin!
If you are a South African citizen working overseas, it’s essential to know the tax laws that apply to you. South Africa has a residency-based tax system, which means that if you are a tax resident, you must pay taxes on all income earned worldwide, regardless of where you earned it. However, if you are not a tax resident, you will only be taxed on income earned within South Africa.
If you earn income from foreign sources as a South African tax resident, you may be eligible for an exemption. The exemption is provided under section 10(1)(o)(ii) from 1 March 2020.
Exemption
It applies to South African tax residents who work outside South Africa on behalf of an employer (local or foreign) for more than 183 full days in any 12-month period, as well as a continuous period exceeding 60 full days outside South Africa in the same period.
Only the first R1.25 million of this foreign employment income earned by a tax resident will qualify for the exemption from the years of assessment commencing on or after 1 March 2020. The foreign employment income earned above this amount will be taxed in South Africa using the normal tax tables for that year of assessment.
It’s important to note that the portion of income exceeding R1.25 million may be double-taxed. However, South Africa has double tax agreements with many countries that provide double tax relief in the form of a foreign tax credit, subject to limitations.
If you are a South African citizen working overseas, it’s essential to know the tax laws that apply to you. Understanding these regulations can help you avoid potential tax-related problems and ensure that you’re following the necessary laws.
If you’re feeling overwhelmed or confused, don’t worry – many South Africans working abroad are in the same position. But you don’t have to navigate this complex landscape alone. Consulting with a tax professional can provide you with personalised advice and guidance on complying with relevant tax laws.
So, reach out to a tax professional for help. We can assist you in understanding your tax obligations and ensure that you’re on the right track. With assistance, you can focus on your work and enjoy your time overseas without worrying about tax issues.
