Tax system in South Africa

When working in another country it is important to find out the tax system to ensure you are paying the correct amount. Residents in South Africa are taxed on their income worldwide but non-residents are only taxed on their income based in the country.  This does include taxation on rent from properties, interest from loans and compensation for services used in the country.

An expat will become a full resident after five years and will be required to pay tax on their worldwide income.

Expats will be taxed on their income worldwide if:

  • They are in South Africa for 915 days or more during the five years assessment
  • They are in South Africa for 91 days or more continuously during the year of assessment
  • They are in South Africa for 91 days or more continuously in each of the five years

Income tax is governed by the Income Tax Act and is collected by SARS (South African Revenue Services).  Expats who are residents living and working in the country are legally responsible to pay for income tax although the SARS income tax depends on the tax residency status and how much you are earning. Expats who have been in the country for 183 days in one tax year, you will be considered a temporary resident of the country so will need to pay tax on income in South Africa.

Working expats must get a SARS income tax number and submit a tax return annually. The tax year runs from 1st March – 28th February. The SARS income tax is usually taken from your salary but you will still be required to complete a South African income tax return. If you are earning less than ZAR 350,000 gross salary you may be exempt from doing so.

South African has tax treaties with over 70 countries and withholding taxes can be reduced. This also means that the amount of withholding tax charged by the home country flowing into South Africa is reduced; this is generally between 0-15percent

It is highly advised to take tax advice from an accountant before moving to South Africa so they can explain the procedure.