South Africa has a residence-based taxation system. What this means is that if you’re still considered a tax resident in the Republic, you’re still considered taxable by the South African Revenue Service (SARS). As such, they will expect you to file a tax return declaring your foreign income (and any locally-sourced income) so that they may tax you on it. Now, if you’re working in another country, chances are you’ll have to pay tax there too. Double taxation on your hard-earned money is no one’s idea of a good time, so you’ll want to take steps to minimise the impact of being taxed in two jurisdictions until you can cease your tax residence in South Africa.
Here’s how it’s done in the UAE, UK and Australia – three of the top destinations for working South Africans.
What is Double Taxation in South Africa?
Double taxation occurs when an individual is liable to pay tax on the same income in two different jurisdictions, because both tax authorities have a taxable interest in that income. Because it’s not exactly fair to get taxed twice for working once, South Africa has entered into a number of agreements with countries all around the world to lessen the impact of double taxation and to decide who has the final word when it comes to collecting tax from a South African tax resident. Where the same income is taxed in both countries, a credit can be sought in the country of residence for the tax paid in the foreign country.
You can find a list of all the Double Tax Agreements and Protocols here, on the SARS website.
How do you avoid double taxation in South Africa on your income?
The country in which you are rendering services or receiving an income will normally require a certificate of residence before you can apply for tax relief at the income source.
This certificate that acts as confirmation of tax residency can be obtained in two ways:
- A resident application form issued by a foreign country where the employment services are rendered or income is derived; or
- A South African resident may request SARS to issue a certificate of residence.
- Where you get a resident application form issued from a foreign revenue authority, it must be stamped by a SARS official and signed by the foreign revenue authority to confirm that you are in fact a South African tax resident.
- This means that you should contact both your SARS office and the foreign revenue authority to ascertain exactly what is required on both sides.
What is a tax residence certificate and how do you get one, in some of the top countries for South African expats?
In the United Arab Emirates:
This certificate, also known as a Tax Domicile Certificate (also known as a Tax Residency Certificate), is open to individuals who are resident in the UAE. To be eligible, you must have a valid resident visa in the UAE for more than 180 days. The Tax Residency Certificate is useful for individuals coming from countries that do not have a double taxation agreement in place with the UAE.
What documents do you need to have to get a Tax Domicile Certificate?
- A passport copy and a valid visa copy issued at least 180 days before your application, as well as an Emirates ID copy.
- 6 months of personal UAE bank statements, stamped by your UAE bank.
- Proof of income in UAE (such as employment contract, share certificate, or salary slip).
- A report from the General Directorate of Residency and Foreign Affairs evidencing all entries/exits.
- A copy or a title deed of the certified tenancy contract valid for no less than three months before application.
The application fee for a Tax Domicile Certificate is AED 2000.
What is the process of obtaining the Tax Residency Certificate?
- Register to create an account on the payable to the UAE Federal Tax Authority portal and complete the application form.
- Upload the required documents in PDF or JPEG format, as prompted.
- Your application and supporting documents will be assessed. If they meet the criteria, you will receive a confirmation email notifying you that you must pay the remaining fees. Once your payment is confirmed, your certificate will be delivered by means of courier.
In the United Kingdom:
How to apply for a certificate of residence in the UK to claim tax relief abroad. To avoid double taxation, you are allowed to claim tax relief in another country if you pay tax on your income in the UK, and you have a certificate of residence (CoR). You can get a certificate of residence if –
- You are considered a resident of the UK
- There is a double taxation agreement in place with the country concerned
The overseas authority dealing with your claim (that’s SARS) will normally request HMRC (His Majesty’s Revenues and Customs) to certify that you’re a resident of the UK, in line with the double taxation agreement.
Here’s how to apply and what you need to know about a certificate of residence in the UK for tax relief purposes.
In Australia:
The Australian Taxation Office (ATO) can issue a certificate of residency to show that for a specific period you were an Australian resident for tax purposes (i.e: not a temporary resident) who is liable to pay tax on worldwide income in Australia.
- An overseas tax relief form is issued by an overseas authority (that’s SARS) to a resident of Australia whose income is subject to tax in an overseas country.
- This must be completed and sent to the ATO to certify, and this certified overseas tax relief form confirms your residency status.
- If you do not have documentation from your overseas tax authority to confirm residency status, you may need to request a certificate of residency.
Interested in reading more about double tax agreements in South Africa?
- Five important things to know about Double Tax Agreements
- Double tax agreements explained for South African tax residents
- Expat Tax Matters: Double Tax Agreements With South Africa
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