The South African Revenue Service (SARS) said yesterday under the country's new laws remuneration payable to South Africans was taxable regardless of where it was earned.
The residence-based system of taxation came into effect at the beginning of the month. It replaced a source-based system of taxation.
Under the source-based system the remuneration paid to government employees in foreign missions were deemed to be from a source within South Africa by virtue of the deeming provisions of section 9(1)(e) of the Income Tax Act. The deeming provisions of this section did, however, exclude allowances paid to assist an official in carrying on the official duties.
With the introduction of the new residence-based system of taxation the remuneration payable to residents of South Africa is taxable in South Africa, regardless of where the remuneration was earned. South African government officials, who are in foreign missions ordinarily retain their resident status in South Africa, and are, therefore, subject to tax in South Africa on any remuneration paid to them (including allowances paid to defray domestic or private expenditure) with effect from March 1 2001.
ISSUED BY THE COMMISSIONER FOR THE SOUTH AFRICAN REVENUE SERVICE