Faculty of Commerce, Law and Management (ETDs)

Permanent URI for this communityhttps://hdl.handle.net/10539/37778

Browse

Filters

2022 - 20232

Settings

Subject: search.filters.subject.Foreign employment income exemption

Search Results

Now showing 1 - 2 of 2
  • Thumbnail Image
    Item
    A comparative study and analysis of the amended foreign employment income exemption in South Africa
    (University of the Witwatersrand, Johannesburg, 2023-01) Essop, Ahmed; Blumenthal, Roy
    Tax exemptions are granted by the government for a multitude of reasons. These include providing some form of tax relief, alleviating specifically identified tax burdens, encouraging investment, promoting donations to approved public benefit organizations and avoiding the possibility of double taxation (Kransdorff, 2010, p. 79). One specific provision in section 10(1)(o)(ii) of the South African Income Tax Act of 1962, pertained to South African residents working abroad, namely the foreign employment income exemption. The intention of this exemption was to prevent residents from being double taxed (SARS, 2021a). Over the last few years, there has been a noted increase in the number of South Africans working abroad and this has been alluded to as being one of the reasons that government decided to review and amend the section 10(1)(o)(ii) foreign employment income exemption (Ryan, 2020). The impact of this amendment on South African residents working abroad will be analysed and investigated. A comparative analysis will be done on the tax payable of South African residents working in the following countries: the UK, the UAE and India
  • Thumbnail Image
    Item
    A critical evaluation and comparative study on section 10(1)(o)(ii) foreign employment exemption
    (University of the Witwatersrand, Johannesburg, 2022) Margolius, Caryn; Kolitz, Maeve
    In 2001, South Africa changed to a residence-based system of taxation to align with international best practice and to limit the opportunities for tax arbitrage (Manuel, 2000, 36.). Section 10(1)(o)(ii) of the Income Tax Act 58 of 1962 (the Act) was amended to exempt foreign employment income of a resident if the resident was outside his or her country of residence for a period exceeding 183 days (National Treasury, 2000, 5). National Treasury cautioned against this exemption and in the Explanatory Memorandum on the Revenue Laws Amendment Bill, 2000 it was stated, The effect of the relief measure will be monitored to determine whether certain categories of employees abuse it to earn foreign employment income without foreign taxation. The main purpose of the exemption was to prevent double taxation from occurring, considering the limited number of double taxation agreements concluded between South Africa and other countries at the time (Mzizi, 2017, 10). The exemption created an opportunity for double non-taxation where the source country imposes little or no tax on employment income and no tax was applied in South Africa (Legwaila, 2019). Consequently, in the Budget Review 2017, National Treasury sought to amend the provisions of s 10(1)(o)(ii) as it was seen to be ‘excessively generous’. At first, National Treasury proposed to repeal the exemption, however after much consultation and public comments received, National Treasury introduced a capped exemption limited to R1 million in line with the principle of fairness and progressivity (National Treasury, 2017b, 7). Subsequently, in the 2020 Budget Review, the exemption threshold was revised upwards to R1.25 million per year from 1 March 2020 to encourage all South Africans working abroad to maintain their ties to South Africa. In this report, the researcher investigates the qualifying requirements and implications of s 10(1)(o)(ii) on South African resident expatriates, their employers (local and foreign) and the South African Revenue Service (SARS)