Revised Tax Guide For Foreigners Working In South Africa
The South African Revenue Service (SARS) has issued a revised guide to inform foreigners working in South Africa and their employers about their income tax commitments.
The guide points out that, under the South African income tax system, amounts received by or accrued to persons other than residents (non-residents or foreigners) from a source within South Africa; and the worldwide income received by or accrued to South African residents (residents), are subject to income tax in South Africa.
Foreigners working in South Africa are therefore only liable for income tax on income earned by them in South Africa, irrespective of from where or by whom that amount is paid (subject to possible double taxation agreement relief).
As the tax status of a resident and a foreigner may differ, the guide looks at how a foreigner’s residency status is determined. However, it also notes that everyone, whether resident or not, whose income exceeds the tax threshold in any given year of assessment has to register for income tax with SARS, complete and submit tax returns declaring that income, and keep records for income and deductions for at least five years.
The guide confirms that income received by a foreigner for services rendered inside and outside South Africa could be apportioned based on the number of days worked in and outside of South Africa during a year of assessment.
In addition, it stresses that, as South African-sourced income received by a foreigner from sources other than an employer (business, investment, or rental income) may be subject to income tax, it must be included in the foreigner’s gross income for the year of assessment.