What SARS could gain, and taxpayers lose, with scrapping of 183-day exemption
The South African Revenue Service (SARS) could bring in significant extra revenue with its plan to scrap the 183-day exemption on foreign employment income, but it will be tough on individuals and employers, tax analysts say. If the estimated 50,000 South African workers in the Middle East were brought into the tax base, "the revenue could be considerable, bearing in mind the present local 45% marginal rate, or even at an average 35% rate", Bravura analyst Kemp Munnik said on Thursday. In practice, where an employee falls into the maximum 45% tax bracket and pays 25% tax in a foreign country, SARS will now collect the difference of 20%. Munnik said the only real relief taxpayers would have was claiming a tax credit under Section 6quat of the Income Tax Act, or under an existing double-taxation agreement. "Changing the 183-day exemption will be detrimental to individuals as they will be forced to come back to SA where they may not have a job," he said. Employers might also be affecte...
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