South African citizens living in the Sultanate and elsewhere will most probably have to remit tax on their overseas employment earnings given the proposals for the same are enacted unamended, according to the diplomatic mission here.
South African expats living and working in countries where tax is not paid on their earnings, like the GCC, will have to start paying up to 45 per cent tax on their employment earnings to the South African Revenue Service (SARS) even though they are not physically present there. Currently, South African expatriates who remain as South African tax residents are exempt from tax on employment income earned overseas if they are outside South Africa for more than 183 days. They are, however, still liable for tax on all other types of income.
However, the mission has also said that the matter is currently put for public discussion and a series of workshops are organised and a high-level public engagement programme is planned for September 5.
“We are in touch with our government and now, what we understand is that the idea of levying tax on the expatriates’ overseas employment income will be given to the public for discussion”, Manabile Shogole, Ambassador of South Africa to the Sultanate, told the Observer.
The first in the series of such workshops will take place on September 5 where they will take the comments from the public, discuss, draw conclusions and present it to the Minister for further action.
“In short, the Minister of Finance will make the decision if the expatriates will continue to be exempt from tax on foreign earned employment income if they remain outside the country for more than 183 days. The proposal came from the government which functions in a democratic way and will constantly listen to the public”, Shogole added.
In February this year, along with the budget announcement in South Africa, it was announced that from March 2019 they may need to pay income tax on overseas earnings, removing the ‘foreign earnings exemption’.
Meanwhile, the finance and tax experts have advised the South African expats need to check their finances and make necessary arrangements forehand to the tax law.
“There is a lot of concern from South African expats, especially in countries in the Middle East, which has a benign income tax system, that the new proposals by SARS will have catastrophic consequences. In these discussions it has become apparent that existing tax obligations on investments are largely unknown, and this is something which can be rectified whilst the amnesty is in place”, says David Denton, Head, International Technical Sales at Old Mutual Wealth.
“It has become clear that not many SA expats are aware of their existing taxation obligations on savings and investment income and gains, which are not exempted. Those impacted should seek urgent professional advice, and could look towards offshore bonds to help make their investments more efficient going forwards”, he added.
Under current legislation SA expats who have retained their tax resident status may need to declare and pay to SARS income tax from investment earnings and on gains. So, for example, a SA expat living in the Sultanate may need to pay up to 45pc in tax to SARS on any investment and savings income they receive on a worldwide basis. The ambassador further added that “there may be around 3,500 to 4,500 South Africans living in Oman. However, the exact number is not available as many of them are not registered with the embassy”.
Kabeer Yousuf
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