Income Tax South Africa: What You Need to Know As a South African Visa Applicant
Are you applying for any of the eight South African residence visas? Or has your South African residence visa application been approved? It is important for you to know and understand the South African tax service system so as to avoid troubles and enjoy your stay in South Africa. This article will highlight everything you need to know as a new immigrant about income tax service in South Africa.
Both temporary and permanent residents of South Africa are eligible to pay income tax, so if you have obtained your residence permit you’ll need to pay tax.
According to South African Tax law, any foreigner who had lived in South Africa for at least 183 days within one tax year will be considered a temporary resident for tax purposes. Any foreigner who had lived in South Africa for three years will be considered a full resident and will be under an obligation to pay tax on all his or her income generated in both South Africa and overseas.
It is important to note that even non-South African residents must pay tax on their income earned in South African though residents pay tax on their income generated worldwide. If you are a foreigner in South Africa with a South African work visa, you would have to pay the employees’ tax, which is deducted on a “pay-as-you-earn” monthly basis, to the tax authority payable by your employers.
It may interest you to consult a professional accountant to advise you on how to avoid becoming a tax resident in South Africa before you move to the country. This will help you to carefully plan your moves.
Generally, income tax rates in South Africa vary from 18% to 40% and in case you sell a property in South African and gain by it, you may have to pay 10% capital gains tax.
The major tax problem faced by most foreigners in South Africa is that South African employers, revenue services, and tax practitioners often treat them like normal South Africans, which is not always in the best interest of the foreigners. However, there are some certain rules that apply and benefit foreigners depending on their circumstances.
Any foreigner who wishes to reside and work in South Africa would greatly benefit by carefully planning in advance. It is also highly beneficial to make every effort to avoid becoming a tax resident in South Africa. However, if you have no other choice but to become a tax resident, make your findings carefully to know beforehand when exactly you would become a tax resident. Whichever, note that your tax status may be influenced by your class of your work permit and application as well as your exchange control residency. Hence, try as much as possible to put these two into consideration.