Taxes in South Africa

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Tax in South Africa is simpleThe South African Revenue Service (SARS) is the equivalent of the UK's HM Revenue and Customs or America's Internal Revenue Service. Tax in South Africa is similar to the UK regime with some differences that expats should be aware of.

The South African tax year begins on 1 March, and an expat becomes seen as a temporary resident of South Africa for tax purposes once they spend 183 days in the country in one tax year. They will then be liable for tax on any income generated in South Africa.

An expatriate becomes a full resident for tax purposes after five years and becomes liable to pay tax on their worldwide income in addition to their income from inside the country. That is, if a person were in South Africa for:
  • 91 days or more in aggregate during the year of assessment, and
  • 915 days or more in total during the preceding five years of assessment, and
  • 91 days more in aggregate in each of the preceding five years.

Even non-South African residents are taxed on their South African income. Residents are taxed on their worldwide income but there are double taxation agreements in place with the UK and other governments so, for instance, if an expat pays tax on a rental property in London they won't need to pay tax to HMRC as well as SARS.

It may well pay for an expat to ensure that they do not become a tax resident in South Africa. If this is unavoidable, expats should make sure they are aware of when they become resident so that they can plan accordingly. Potential expats are strongly advised to take tax advice from an accountant before moving to South Africa.

Once someone becomes a full tax resident of South Africa, they are likely to remain domiciled in their home country and inheritance tax would therefore still be paid there in the event of their death.

Foreigners need to declare their worldwide assets, and must not make these available to residents while they are staying in the country.

Income tax rates in South Africa range from 18 percent to 40 percent. Capital gains tax is 10 percent, and will need to be paid on the sale of a South African property should a gain have been made.

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