A financial guide if you’re moving from South Africa to Dubai

Dubai charges no personal income tax, which is one reason thousands of South Africans have moved there for work. While you remain a South African tax resident, however, SARS taxes your worldwide income, and that includes your Dubai salary. Changing your tax status with SARS brings your tax position in line with the life you are building abroad.

This guide explains how South African tax residency works, the ways you can cease it, how to notify SARS, and what to expect once you are a non-resident.

Moving to Dubai from South Africa? Here’s how Dubai taxes your income

The UAE levies no income tax on individuals. It charges 5% VAT on goods and services, excise tax on certain products, and corporate tax on business profits. If you plan to run a business in Dubai, check how corporate tax applies to you.

Why your Dubai salary may still be taxed in South Africa

South Africa has taxed its residents on their worldwide income since 1 March 2001. Your South African tax residency stays in place until you meet one of SARS’s criteria for ceasing it and declare the change.

As a tax resident working abroad, you can claim the foreign employment income exemption if you spend more than 183 full days outside South Africa in any 12-month period, including a continuous period of at least 60 full days. The exemption covers only the first R1.25 million of worldwide employment income per tax year. Anything above that is taxed in South Africa at normal rates. The threshold has stayed at R1.25 million since 1 March 2020, including after the 2026 Budget.

Because the UAE levies no tax on your salary, you have no foreign tax to credit against your South African liability. The amount above R1.25 million is taxed in full by SARS. For example, if you earn the equivalent of R1.8 million in Dubai, R550 000 is taxable in South Africa.

Independent contractors, self-employed people and public sector employees are excluded from the exemption entirely.

Read more: What is exempt foreign employment income in South Africa?

Who counts as a South African tax resident

SARS uses two tests to decide whether you are a tax resident.

The ordinarily resident test asks where your real home is. SARS looks at your circumstances case by case, including where your family lives, where your property and business interests are, and how often you return to South Africa.

The physical presence test counts the days you spend in South Africa over a six-year period. If you exceed the thresholds, you are a tax resident even if your home is elsewhere.

There is also an important exception. If a double tax agreement (DTA) treats you as a resident of another country only, you are excluded from South Africa’s definition of a resident, even if you would otherwise meet one of the two tests.

Read more: South African tax residency rules: expats, are you still tax residents of South Africa?

Three ways to cease South African tax residency

SARS recognises three qualifying bases for ceasing South African tax residency. The one that applies to you depends on how you were resident in the first place and on your circumstances in Dubai.

1. Ceasing to be ordinarily resident

This route applies when you have left South Africa with the intention of making Dubai your real home, and your circumstances support that intention. SARS considers factors such as:

• the type of UAE visa you hold
• whether you have a UAE tax residency certificate
• any property you still own in South Africa and how it is used
• business interests, investments or employment you keep in South Africa
• where your family members live
• your social ties, such as club memberships, and where your belongings are
• how often you visit South Africa and why

2. Ceasing by way of the Physical presence test in South Africa ,

If you are a tax resident only because of the physical presence test, you cease to be resident once you have been outside South Africa for a continuous period of at least 330 full days. Your residency ends from the day you left.

3. Ceasing through the South Africa-UAE double tax agreement

South Africa and the UAE have a DTA, and its residence article includes a tie-breaker for people who qualify as residents of both countries. If the tie-breaker makes you a resident of the UAE, you cease to be a South African tax resident. For this route, SARS requires a certificate of tax residence from the UAE tax authority.

You qualify as a UAE tax resident if you meet any one of these conditions:

• you spend 183 days or more in the UAE within a 12-month period
• you spend 90 days or more in the UAE within a 12-month period, hold a valid UAE residence permit, and have a permanent place of residence or employment or a business there
• your usual place of residence and the centre of your financial and personal interests are in the UAE

You apply for a tax residency certificate from the Federal Tax Authority through its EmaraTax portal. For certificates used to claim DTA benefits, the FTA’s guidance points to 183 days or more of physical presence in a 12-month period.

How to notify SARS: step by step

1. Establish the date you ceased residency. This depends on your qualifying basis and becomes the date SARS treats you as a non-resident.
2. Update your RAV01 on eFiling. Capture the date under the Income Tax Liability Details section of the Registration, Amendments and Verification form. Update the RAV01 before you submit your next income tax return.
3. Wait for SARS’s letter. SARS opens a case and sends you a letter asking for supporting documents.
4. Submit your declaration and documents. Upload the signed Declaration to Cease to be a Tax Resident, a letter of motivation explaining your circumstances, and copies of your passport or travel diary showing your entry and exit stamps. Add the documents for your qualifying basis, such as your UAE tax residency certificate for the DTA route.
5. Request confirmation of your status. Once SARS has accepted your declaration, you can request written confirmation of your non-resident status. Banks, employers and retirement fund administrators often ask for this letter.

SARS declines declarations where the taxpayer does not meet the criteria or cannot supply the correct supporting documents, so build your evidence file carefully.

Read more: How to prove to SARS that you are no longer a South African tax resident

Read more: Tax emigration: how to become a non-tax resident of South Africa

Tax consequences of ceasing South African tax residency

You are taxed only on South African sourced income. Your Dubai salary falls outside SARS’s reach. Income such as rent from a property you keep in South Africa remains taxable there.

Exit tax applies. When you cease South African tax residency, SARS treats you as having sold your worldwide assets on that date, excluding immovable property in South Africa. Capital gains tax is calculated on the resulting gain, even though you sold nothing.

Your retirement annuity becomes accessible after three years. Once you have been a non-resident for three uninterrupted years, you can withdraw your South African retirement annuity and preservation fund savings in full, subject to lump sum tax.

Returning to South Africa must be declared. If you move back and meet the residency requirements again, you notify SARS through the RAV01 form on your eFiling profile. No supporting documents are needed for reinstatement.

Read more: Cashing in your South African retirement annuity before age 55

Financial emigration from South Africa is a discontinued process

The South African Reserve Bank phased out its recognition of emigration on 1 March 2021. Since then, ceasing tax residency with SARS has been the formal process for South Africans who leave. If you completed financial emigration before March 2021 and never notified SARS, check your tax status, because financial emigration alone did not end your tax residency.

Frequently asked questions

1. Do I pay South African tax on my Dubai salary?
   If you are still a South African tax resident, yes, on any worldwide employment income above R1.25 million per tax year, provided you meet the days requirements for the exemption. Once you cease tax residency, SARS taxes only your South African sourced income.
2. Does the exit tax apply to my house in South Africa?
   The deemed disposal excludes immovable property situated in South Africa. Capital gains tax on that property applies when you sell it.
3. What documents does SARS need for the DTA route?
   The standard documents (signed declaration, letter of motivation and passport copies) plus a certificate of tax residence from the UAE Federal Tax Authority.

How FinGlobal can help with ceasing South African tax residency

FinGlobal helps South Africans in Dubai and more than 100 other countries cease their tax residency in South Africa, withdraw their retirement annuities and transfer their funds abroad. Contact our team for a consultation.

Article written by Jason Jansen, Expat financial specialist at FinGlobal.