With the introduction of the Accelerated and Shared Growth Initiative for South Africa (AsgiSA), South Africa is looking for experienced foreign nationals to fill areas with skills shortages. If you have a minimum of 5 years experience in areas including medicine, law, engineering, agriculture, senior management and technical operations, you will be considered a valuable asset to the country.

But long before the introduction of AsgiSA, foreign nationals have been coming to South Africa to work, lured by the warm climate and beautiful countryside.

South Africa itself contains a cosmopolitan mix of people, made even more diverse by the selection of expats from countries including USA, UK, Netherlands and Germany.

If you are planning on moving to South Africa or are already one of the expats permanently working or on extended vacation here, it is valuable to be aware of the tax implications.

Non-resident tax in South Africa:

As you are likely already a tax resident in another country, it makes sense to not further complicate your life by having to pay tax in two countries. While this may not always be possible, it is better to be aware of the circumstances that would make you a tax resident in South Africa so that you can plan accordingly.

South Africa has a residence-based tax system. What this means is that residents are taxed on their worldwide income, regardless of where that income was earned. Therefore if you are earning a salary outside of South Africa, the tax implications could be considerable should you be classified as a resident of South Africa. However if you are considered a temporary resident then you will only pay tax on income that was generated in South Africa.

What classifies me as a tax resident opposed to a non-resident?

South Africa follows a tax year that runs from 1 March to 28 February of the following year. If you spend more that 183 days in South Africa during the tax year, you will be considered a temporary resident and be liable to pay tax on any income generated in the country.

You are seen as a full resident after 5 years if you have been in South Africa for:

  • 91 days or more in total during the year of assessment
  • 915 days or more in total during the previous 5 years of assessment
  • 91 days or more in total in each of the preceding 5 years

Once you are considered a full resident, you are liable to pay tax on your worldwide income as well as income earned in South Africa.

When you consider that income tax can range as high as 40%, it highlights the importance of monitoring the length of your stay in South Africa so that you can determine if you are liable for tax or not.

For assistance with expat tax related enquiries, contact Cape Town Accountant Brett on 021 421 4444.