South Africans working abroad often assume they’re “off the taxman’s radar,” especially if their employer is not registered for employees’ tax in South Africa. But that assumption can get expensive, and distance is not enough to make the South African Revenue Service (SARS) forget about you. If you are still considered a resident for tax purposes in South Africa, SARS expects you to submit provisional tax returns twice a year. Missing those deadlines can trigger penalties, interest and a stressful clean-up with the revenue authority.
Since 1 March 2020, South Africans working abroad can only rely on the foreign employment income exemption in South Africa for the first R1,25 million earned. If you don’t meet the exemption’s 183-day tax rule South Africa requirement, or if your income exceeds the exemption cap, you will likely owe expat tax in South Africa and be required to pay provisional tax.
Top three takeaways for expats on tax in South Africa
- You’re likely a provisional taxpayer – If your employer abroad doesn’t deduct PAYE, SARS expects you to submit provisional tax returns if you are still a tax resident in South Africa.
- Tax residency is about more than 183 days – The ordinarily resident test and physical presence test determine your tax status — not just how long you’re abroad. Failing to meet the 183 day rule for taxes means your foreign income may still be taxable – also known as expat tax.
- Ceasing residency changes the rules – Formally ceasing tax residency in South Africa generally removes provisional tax obligations on foreign income. Non-residents pay SA tax only on SA-sourced income.
Read more: Why South African expats must stay sharp on SARS tax residency rules.
How South African tax residency is determined
Many expats misunderstand how tax residency works in South Africa. Simply spending time abroad does unsaddle you from your South African tax burden. As long as you are a tax resident, SARS is entitled to expect tax from you. SARS uses two tests:
- Ordinarily resident test: This is the primary test. You are ordinarily resident if South Africa is your permanent home, the place you would naturally return to, and where your personal, social, and economic ties are strongest. Even long periods abroad may not break residency.
- Physical presence test: If you don’t meet the ordinarily resident test, SARS counts your days in South Africa: at least 91 days in the current tax year, 91 days in each of the preceding five years, and a total of 915 days over those five years. Meeting this test also makes you a tax resident.
Read more: Breaking tax residency with SA: when to apply the physical presence or ordinary residence test.
Understanding how these tests impact your tax position is critical because merely qualifying under the 183 day rule in South Africa allows you to claim the foreign employment income exemption. Failing the time test means your worldwide income could be taxable in SA.
Which expats must pay provisional tax, and why?
Provisional tax exists for taxpayers who don’t have PAYE deducted, ensuring SARS receives tax as income is earned. Most expats fall into this category because foreign employers do not submit payroll taxes to SARS.
It is important to note that you remain a tax resident in South Africa until you formally cease tax residency by tax emigration through SARS. Until then, if you have a provisional tax obligation, you are required to make to annual provisional payments.
How provisional tax works for expats
Provisional tax helps SARS collect tax from individuals who don’t have PAYE deducted, including many South Africans working abroad. If you are a tax resident in South Africa, you must estimate your total taxable income for the year – including any foreign income not covered by the foreign employment income exemption – and pay tax in advance.
Provisional tax is paid in two cycles:
- First provisional payment: Due at the end of August, based on an estimate of your total income for the year. This is effectively a “mid-year” tax payment.
- Second provisional payment: Due at the end of February, which is usually adjusted based on your actual income or updated estimates.
If your total income exceeds the foreign income exemption’s cap of R1,25 million or you don’t qualify for the 183-day rule spent out of South Africa, these payments are mandatory. This system also applies to independent contractors abroad, who often don’t have PAYE deducted. Without provisional payments, they risk underpaying tax and facing penalties at year-end. Contractors need to calculate their taxable income and submit provisional tax returns to SARS on time to remain compliant.
What happens if you’ve ceased tax residency?
Once you formally cease tax residency in South Africa via tax emigration, you generally become a non-resident for tax purposes in South Africa. Non-residents pay SA tax only on SA-sourced income, which usually means you no longer need to submit provisional returns for foreign employment income.
However, SARS only recognises non-residency once formally declared and approved. Simply living abroad or meeting the requirements of the foreign income exemption does not automatically remove your obligations.
Read more: The dangers of not completing tax emigration after you leave South Africa.
Common pitfalls expats face when it comes to tax in South Africa
Many expats get caught by:
- Assuming foreign employers handle their SA taxes.
- Believing that staying abroad for 183 days automatically severs tax residency.
- Missing the August provisional deadline because they assume the exemption applies automatically.
- Forgetting that earning above R1,25 million means part of their income is taxable in SA.
- Ignoring/failing to declare SA-sourced income such as rental property, dividends, or freelance work.
These mistakes can trigger penalties, interest, and SARS queries, especially as SARS’ focus on South African expat tax compliance increases.
Read more: Warning – SARS is monitoring South African expats abroad who want to return home.
How FinGlobal can help
Managing expat tax in South Africa, knowing when to submit your provisional returns, and finding your way through the foreign income tax rules can be complex. FinGlobal specialises in helping expats make short work of these challenges. Our services include:
- Tax emigration guidance to formalise your non-resident status
- Assistance with provisional tax submissions and planning
- Advice on claiming the foreign employment income exemption correctly
- Tax refunds for overpaid or incorrectly calculated tax
With FinGlobal, you can ensure your South African expat tax obligations are handled correctly and on time, leaving you free to focus on life abroad.
Avoid penalties, interest, and confusion – get expert support for a smooth, compliant expat tax journey. Drop your contact details below and we’ll be in touch to find out how we can help streamline your taxes.