If a resident works more than 183 days abroad without paying taxes abroad, that foreign income will benefit from double non-taxation. It is proposed to adapt this exemption so that foreign labour income is exempt only if it is taxable abroad. However, the DBA between South Africa and the United Arab Emirates allows for certain exceptions. The main exception is that South Africans claim not to be resident in their country of origin; so to speak exclusively for their host nation (as expatriates). This agreement followed a similar agreement between South Africa and Saudi Arabia. As for the residency-based tax system, South African residents are taxed on their global income. But the government notes in the 2017-2018 budget that this exemption of foreign income from work seems excessively generous. The DTA between South Africa and the UNITED Arab Emirates was not designed to allow expats to make an easy financial journey. PricewaterhouseCoopers points out that the main objective was “to reduce the administrative burden on international workers – not to offer a complete tax exemption”. The agreement includes the South African standard tax, withholding tax on royalties, withholding tax on dividends, withholding tax on interest and tax on foreign artists and sportsmen. It covers income tax and corporate tax from the annual U.S.
tax. This can be a complex and difficult procedure. What makes things even more difficult is that if you don`t live in South Africa, it can be difficult to find and submit the relevant documents needed for your financial emigration application. Where the foreigner has no income tax, the helmsman can therefore assert it at home! In this scenario, the vast majority of South Africans from countries like the United Arab Emirates would be considered to normally reside in South Africa, even if they spend the necessary time outside the country, even for years. As a result, thousands of expats can be trapped in this new tax network. You must then compile all the documents that explain to your non-resident in South Africa – for example. B a certificate of tax resident of the United Arab Emirates. There are reports circulating in local news agencies that have optimistically stated that, regardless of the new income tax rules, South Africans living abroad could allow South Africans living abroad to continue not to pay South African taxes.
Section 10(1)(o)(ii) has so far allowed tax-exempt status for income obtained outside South Africa if: many South Africans work in medium and long-term work in tax-free countries such as the United Arab Emirates. Working in these countries most of the year frees many of these expats from paying income tax to SARS on foreign income. However, with recent changes in tax legislation, many expats are finding that it will likely be expensive to remain a tax based in South Africa. The good news is that there are steps, like financial emigration, that you can take to make sure you don`t pay taxes on your foreign income. If so, pool your assets and holdings and take into account the starting taxes in effect when selling these assets, such as.B. capital gains tax if your shares/participations/property have gained in value. No music to your ears as a South African expat in the UAE. So, stop your financial advisor! We`re talking about your overall tax position, which includes the savings and investment you`ve already put in place and their potential “capital gains.” the impact of your tax status on assets located both outside the UAE and outside South Africa (i.e. the UAE has a DBA with that third country?); potentially improved options for safeguarding a mortgage established in the United Arab Emirates. . . .