Changes Proposed For South African Foreign Earned Income Exemptions
South Africa has proposed the removal of the 183-day foreign-earned income exemption in certain situations. Those certain situations, it seems, are when an expat resides in a jurisdiction with very low or non-existent taxes, which means they could be getting away with being doubly non-taxed. But the proposal has led to inevitable concerns that expats will end up being doubly taxed instead.
The Government argues that the foreign income exemption was put in place at a time when South Africa had far fewer double tax avoidance treaties than it does today. It assures those taxpayers likely to be affected by the new rule – if introduced – that tax credits will be available to prevent situations of double taxation arising. Although I imagine applying for a foreign tax credit is unlikely to be a comforting prospect for those who currently don’t need to. What’s more, this is yet another worrying sign of the fiscal times for South Africa, and one wonders which direction the Government will move next in its quest for more revenue.
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