SARS Expat Tax – Time To Check If You Need To Pay


If you are a South African living or working overseas, now is a good time to test your tax status.

In case you haven’t heard the biggest news to come out of the South African Revenue Service (SARS) in a while, the South Africa Expat Tax status is set to change from March 2020.

And for many, that might not be a good thing.

Until March, South African expats out of the country for more than 183 days, of which 60 days should be in a row, have not paid SARS tax on their foreign earnings.

This all changes from March next year.

The new rule brings expats considered ‘physically present’ or ‘ordinarily resident’ into the SARS tax net wherever they live in the world – and if they earn more than R1 million a year, they must pay tax in South Africa on the money at a rate of 45%.

Physical presence is if you are deemed a South African resident by the time you spend in the country.

Ordinarily resident is if you intend to return to South Africa or maintain connections with the country, like owning a home.

Low tax dilemma

The implications are worse for South Africans living in low tax countries, such as the Gulf States.

Take a South African expat  in Dubai, declared ordinarily resident because he or she intends to return to Cape Town to retire in five years or so.

If their contract pays R2.5 million a year, under current rules they pay no income tax in the United Arab Emirates or South Africa.

But from March 2020, they will pay at 45% on R1.5 million a year – equivalent to R675,000 a year.

That makes a thumping R3.375 million tax bill over five year, which is more than a year’s salary.

Many expats are considering financial emigration to break the link with South Africa, but this is not always the best course of action.

Financial emigration

“By taking the right advice as quickly as possible, you can mitigate that tax liability,” said Nigel Green, CEO and founder of world leading expat financial advice firm deVere Acuma.

“South Africans have a fantastic opportunity if they do take the right advice to reduce their taxation and to make sure they secure their financial future.”

Green also explained many experts touting financial emigration as a solution to the tax dilemma may be leading expats into more financial issues.

“Financial emigration is one option and not necessarily the best,” said Green. “Becoming non-resident can lead to capital gains problems and prevents expats retiring back home.

“There are other options available to mitigate the tax without taking such drastic steps.”

Download the Free South African Expat Tax Guide

South African Expat Tax expert writers have created a simple guide to the South African Expat Tax just for our readers.

This guide will explain the South African Expat Tax and talk through the issues and steps you can take to be in a better financial position. Download the free guide by following the link below

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