By Greg Atherstone, Associate Director JPS
The hotly debated new proposed tax laws, which plans to scrap the 183-day tax exemption is still being discussed.
At present, there has been a lot of push back at the proposal which is twofold.
1.) Taxing South Africans who live in SA but work more than 183 days outside the country and pay zero tax. This person must pay tax and we are certain this law will come into effect from March 2019. I don’t see this affecting many people in Singapore as most of us South Africans live in Singapore full time.
2.) A second proposal is taxing people living abroad in low tax jurisdictions and paying the difference in tax to SARS. Practically speaking, how can SARS implement this, given the complexity of the situation it does not seem feasible. There has been a lot of push-back on this and the advice JPS has taken from various SA Tax Specialists is that this will not be passed, therefore for all us South Africans we should be ok.
In South Africa, all DTA’s (Double Tax Agreement) override the Income Tax Act but the Constitution can override a DTA so in effect if the government does not like a DTA they can change the Constitution. The DTA between Singapore and South Africa will need to be looked at closely as currently it is loosely worded.
There are companies targeting South Africans with Facebook advertising, claiming they can help with the new proposed changes. We are not sure how they are able to do so when this new tax proposal has not even been passed yet? Going through Financial Emigration “if” this bill is passed MAY alleviate the issue. However, financial emigration when its not required can have huge impacts on your financial matters as potentially there could be large capital gains tax bills to pay. Taking money out of SA in the form of provident funds for other reason, i.e. rand depreciation is a totally different matter. JPS is constantly monitoring the changes and is in contact with our Tax Specialists in South Africa. We do urge you to tread with caution on advice given on the changes as without this actually being passed through parliament, no financial emigration advise can be correctly given regarding this change.
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Associate Director, JPS
Contact Number: 91807404
Email Address: email@example.com
Sources: Tax Consulting SA, Capita Tax SA, Tax Corp SA, scielo.org.za, saica.co.za
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