South Africa Introduces the Concept of “Double Non-Taxation”


As expatriates, we are all familiar with the concept of Double Taxation Agreements which prevent the same income being taxed twice.

Now the South African Government wants to set a dangerous precedent by introducing the concept of “Double Non-Taxation”.

How might this affect you?

If, as a South African, you work abroad for a short period the Treasury believe that you have enjoyed an “excessively generous” exemption by not paying South African tax on your income when living and working outside South Africa.

To qualify for the exemption, you must spend a full 183 days outside of South Africa during a tax year and, during that 183-day period, you must be out of South Africa for a continuous period of at least 60 days.

Now the Government is saying you, as a South African, work in a foreign country for more than 183 days and there is no tax payable in the foreign country, that foreign employment income will benefit from “Double Non-Taxation”. The proposal is that if your foreign employment income is not taxed in your country of residence you will pay South African income tax as if you were still resident in South Africa.

Internationally the practice is also to exempt foreign income, but in some instances, as in the US, the exemption on foreign income earned is capped.

The current proposal means that a South African who is paying tax in a foreign country can continue to enjoy the unilateral tax exemption.

Some have commented on the unfairness of the proposals meaning that some expats may only pay 15% in the country of employment and enjoy a full 45% tax exemption in South Africa whereas others must pay 45%.

Considering these comments, and the fact that the proposals are at an early stage, it is unclear whether the final rules will affect only expats who are subject to no tax in the foreign jurisdiction, or whether expats in low tax jurisdictions would also be caught.

If a tax credit system is followed, the tax paid in the foreign jurisdiction will be offset against the tax payable in South Africa.

Should you panic?

You shouldn’t panic yet as the proposed changes are just that – proposed. The South African Government will still consult widely before any changes are implemented.

We do not expect the final proposals before 2018 and expect implementation from 2019. However as always with these matters, early planning is essential to protect your wealth from the expansion of tax measures.

AAM Services for South African Expatriates

AAM Wealth Solutions provide advice to you, as a South African expatriate, on how to structure your wealth to prevent over taxation, whilst you are an expat and after you return home.

We consider effective ways to manage your wealth, keeping it outside South Africa but complying with South African Revenue Service (SARS) regulations, thus allowing you to repatriate funds whenever you need to.

We can assist in managing your portfolio, with no tax on income or gains until you withdraw money. The tax on withdrawals will be on the profit made and will be at a maximum rate of 18% if you are living in South Africa at the time of the withdrawal.

Don’t lose your chance to control the impact of taxation on your wealth

Contact your AAM Financial Planner now or email to arrange a no obligation meeting to discuss how you can protect your wealth.

Ian Black
Head of Wealth Solutions
AAM Advisory Pte Ltd


This article is an op-ed piece by Ian Black. The views expressed in this article are those of the author and do not necessarily reflect the views of AAM Advisory Pte Ltd. This document/article should not be construed as an offer, solicitation of an offer, or a recommendation to transact in any securities/products mentioned herein. The information does not take into account the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a licensed financial adviser regarding the suitability of the investment product before making a commitment to purchase the investment product. Past performance is not necessarily indicative of future performance. Any prediction, projection, or forecast on the economy, securities markets or the economic trends of the markets is not necessarily indicative of future performance. Whilst we have taken all reasonable care to ensure that the information contained in this document is not untrue or misleading at the time of publication, we cannot guarantee its accuracy or completeness. Any opinion or estimate contained in this document is subject to change without notice. The above report may contain data obtained from third parties and as such we cannot guarantee the accuracy of this data.