STUART THEOBALD: Tax on South Africans working overseas is a myopic miscalculation
The Treasury has long championed economic impact assessments for proposed legislation
On the whole, the Treasury does a fine job of crafting regulations for the domains it oversees. But every now and again there is a major misstep, and those tend to have to do with tax. Somehow, the Treasury has fits of myopia when it perceives what it thinks to be a tax loophole. It brings out a sledgehammer, usually breaking far more than it expects.
It added to its record of bad tax ideas last week with a proposal to do away with the 183-day rule that allows South Africans working overseas to be exempt from paying tax in SA. The proposal was part of a wide-ranging set of amendments to tax legislation, most of which were routine. But this change was a rude shock, with February’s budget giving no hint of the scope of the amendment that was coming. The consequences are potentially dramatic. At the moment, if you’re a twentysomething wanting overseas experience, you can work anywhere in the world and not have to worry about the South African Revenue Service (SARS) chasing you for income you earn abroad. If you’re a company wanting to open up in Dubai or anywhere else, you can use South African expats on the same terms that your competitors are able to employ their workers, ensuring you can compete on a level playing field.In the February budget, then finance minister Pravin Gordhan flagged an intention to stop South Africans headin...
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