If a resident works more than 183 days in a foreign country 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 taxed abroad. The agreement followed a similar agreement between South Africa and Saudi Arabia. The advantageous provisions of section 10 (dividends), 11 (interest) and 12 (licence fees) do not apply where the primary purpose or one of the principal purposes of a person to be invoked in the creation or transfer of the shares, claims or other rights for which the income is paid was to use those items by that creation or assignment. The restriction is contained in each of these articles. Holborn Assets is happy to work with you and complete all the specialized tax advice at home. Let the local experts do their thing. You may claim not to reside in your home country. They must meet strict criteria. So whether you are alone – or preferably with an IFA – you must first decide whether you are currently considered a tax resident in South Africa and whether you can instead be considered a “contract resident” in the United Arab Emirates. This means that if your circumstances change over the long term and you decide to return to South Africa, you can do so and then change your residency status with the SARB. What these commentators seem to have forgotten is that the South African government can choose to amend the treaty or simply pass laws that crack down on the discharge of the treaty. A DBA has no superiority over the income tax law.
Articles are circulating in local news agencies that have stated with great optimism that, regardless of what the new income tax rules say, DBA South Africans living abroad may continue to pay no taxes against South Africa. In December 2016, South Africa and the United Arab Emirates formally agreed on an updated double taxation agreement. The DBA essentially means that income and assets that are taxed in a country – for example. B in the country of residence of an expatriate – are not taxed at home. With regard to the residence-based tax system, South African residents are taxed on their global income. However, in the 2017-18 budget, the government finds that this exemption from foreign labour income seems excessively generous. Talk to a professional. These are complex stumbling blocks, and only a professional will really be able to give you a reliable assessment of your unique personal situation. The DBA between South Africa and the United Arab Emirates was not designed to allow expatriates to move easily around the market.
PricewaterhouseCoopers stresses that the main objective is to “reduce the administrative burden on international workers – not to grant a full tax exemption.” Many South Africans work in medium and long term countries that are not subject to income tax, such as the United Arab Emirates. While many of these expatriates work most of the year in these countries, they release sarS for foreign income. However, in light of recent changes in tax legislation, many expatriates are finding that maintaining a South African-based tax is likely to be costly. The good news is that there are measures like financial emigration that you can take to ensure that you do not land paying taxes on your foreign income. You must ask the SARB to change your resident status to “non-residents.” This is a legitimate way to avoid paying South African taxes on your income in the United Arab Emirates or another tax-free country.