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Alert: South Africa amends law regulating exemption of foreign earned income

June 6, 2019 / 1 min read

South Africa has amended the current law regulating the exemption for foreign earned income as applicable to South African tax residents. This change will impact South Africa employers, foreign employers, and South Africa residents.

South Africa has amended the current law regulating the exemption for foreign-earned income as applicable to South Africa tax residents. Currently, as described in Section 10(1)(o)(ii) of the Income Tax Act, tax residents meeting the eligibility requirements may exclude all foreign-earned income from South Africa taxation. An amendment to the code, effective March 1, 2020, introduced a limited exemption of 1 million South African rand (ZAR) (around $63K) annually. Income in excess of 1M ZAR will be subject to South Africa taxation but may be mitigated by foreign tax credits (FTC), when applicable. The eligibility requirements remained the same: 183 days in 12-month period and more than 60 consecutive days of services outside South Africa.

The rules for claiming FTC include:

It’s important to note that this amendment will affect employers, foreign employers, and residents.

South Africa employers:

Foreign employers:

South Africa residents:

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