A person cannot be treated as a South African resident for tax purposes if he or she is a resident of another country under the “tiebreaker” rules of a double tax treaty applicable to the relevant income item.
Income subject to tax. The taxation of various types of income is described below.
Employment income. The basis of employee taxation is remuneration, which consists of salary, leave pay, allowances, wages, overtime pay, bonuses, gratuities, pensions, superannuation allowances, retirement allowances and stipends, whether in cash or otherwise. These payments, together with the cash value of any fringe benefits received, form part of the gross income of an employee. Fringe benefits are taxed in accordance with a schedule of valuations.
Remuneration from employment on extended absences outside South Africa is exempt from tax if the employee is outside South Africa for an aggregate of more than 183 full days in any 12-month period and for at least one continuous period exceeding 60 full days during the same 12-month period.
Only the first ZAR1.25 million of remuneration with respect to foreign services rendered is exempt from tax under the foreign employment income exemption. A foreign tax credit can be claimed for foreign taxes paid on foreign employment income in excess of ZAR1.25 million.
Residents do not qualify for an exemption where a lump sum, pension or annuity is received or accrues from a South African retirement fund, regardless of whether services are rendered outside South Africa. For such income to qualify for the exemption, the resident must have rendered services outside South Africa and the lump sum, pension or annuity must be received or accrued from a foreign retirement fund.
Self-employment and business income. Professional fees paid to nonresidents are subject to employees’ tax withholding (if from a South African source), even if the nonresident is an independent contractor.
Investment income. Foreign dividends on holdings of less than 10% that are paid to residents are taxable, subject to the provisions of an applicable double tax treaty. Credit for foreign tax paid may be available. Foreign dividends paid on greater holdings are exempt. A portion of the foreign dividend is exempt. The exempt portion of the dividend is determined by multiplying the dividend by a factor that results in a maximum tax rate of 20%, thereby providing a result similar to that produced by the local dividends tax.
Domestic dividends are subject to a final withholding tax of 20%. Royalties paid to nonresidents are subject to a final 15% withholding tax.
For residents, South African-source interest only up to a cumulative ZAR23,800 (ZAR34,500 for individuals older than 65 years of age) is exempt from normal income tax (general interest exemption). Interest derived from investments in qualifying TaxFree Savings Accounts is exempt from normal income tax.
Relief for losses. Business losses of a self-employed person may be carried forward indefinitely if the trade is continued. No loss carrybacks are permitted.
B. Other taxes
Capital gains tax. Capital gains are taxable in South Africa. Capital gains tax (CGT) is imposed through the income tax system by including a portion of the calculated gain in the taxable income of a person. For residents, CGT applies to capital gains derived from the disposal of worldwide tangible and intangible assets. Nonresidents are subject to CGT on capital gains derived from the disposal of real estate held directly by the nonresident or indirectly through a company or trust (if 80% of the value is attributable to real estate), or the assets of a permanent establishment in South Africa. A deemed capital gain arises on the loss of tax resident status.
For individuals, a ZAR40,000 annual exemption of capital gains or reduction in capital losses is allowed. Only 40% of capital gains (after the exemption) is taken into account for CGT purposes. Consequently, the effective CGT rate for an individual taxed at the highest marginal income tax rate of 45% is 18% (40% x 45%).
CGT applies only to increases in value occurring on or after 1 October 2001 and a formula calculation or a formal valuation is used to determine the base value at that date. Inflation indexing of base cost is not allowed. Rollover relief is available in certain circumstances, including the destruction or scrapping of assets. A gain derived from the sale of an individual’s primary residence is not subject to CGT unless the amount of the gain exceeds ZAR2 million.
Capital losses, other than those incurred on the disposal of personal-use assets (assets used primarily for purposes other than the carrying on of a trade), may offset capital gains. However, net capital losses may not be offset against regular taxable income. Excess losses may be carried forward indefinitely to offset future gains (subject to the ZAR40,000 annual reduction, which is discussed above).
Estate duty and donations tax. Estate duty and donations tax are levied at a flat rate of 20% on net assets at death and all capital transfers concluded for no consideration or for inadequate consideration.
Effective from 1 March 2018, a rate of 25% applies to donations exceeding ZAR30 million and on estates for which the dutiable amount is more than ZAR30 million.
Exemptions from donations tax are granted for donations of up to ZAR100,000 made each year during a person’s lifetime. A deceased’s estate is subject to duty only to the extent that the net value exceeds ZAR3,500,000 (ZAR7 million for a married couple).
Residents are subject to estate duty and donations tax on worldwide assets, except offshore assets acquired by inheritance or donation from a nonresident or owned prior to becoming resident.
Germany Norway
Ghana Oman
United Kingdom
United States
Greece Pakistan Zambia
Grenada Poland Zimbabwe
Hong Kong
Portugal
In addition, many treaties are being renegotiated by way of protocol.
F. Visitors’ visas
Under Section 11(1) of the Immigration Act No. 13 of 2002, as amended (the Immigration Act), visitors’ visas are for international travelers (citizens of other countries) who have permanent residence outside South Africa and who wish to visit the country on a temporary basis for tourism for a period of 90 days or less. The Department of Home Affairs does allow an international traveler who travels to South Africa on a Section 11(1) visitor’s visa (tourist visa) to attend limited business meetings or attend a conference or seminar on this visa type.
A visa indicates that an individual’s application has been reviewed at a South African embassy, mission or consulate and that the consular officer has determined that the individual is eligible to enter the country (via the dedicated ports of entry) for a specific purpose.
The visa allows an individual to travel to a South African port of entry where an immigration official then determines if the individual is allowed to enter South Africa and how long the individual can stay for that particular visit. Visitors are restricted to the activity or reason for which their visas were issued.
To obtain a visitor’s visa for recreational purposes only, proof of sufficient financial means and a return air, boat or bus ticket must be submitted. Individuals who have traveled or who intend to travel through a yellow fever area must produce a yellow fever vaccination certificate. This requirement excludes direct transit through yellow fever areas. Proof of guardianship and custody is required with respect to minor dependent children together with consent from the other parent when traveling with only one parent. A visitor’s visa may be renewed only once for a maximum period equal to the original visa. Thereafter, the visitor must depart from the country.
The holder of a passport of certain jurisdictions (subject to change without notice) may be issued a visitor’s visa at the port of entry if the intended stay is 90 days or fewer or if the individual is in transit and a return air or other travel ticket is shown.
The holders of a passport from certain jurisdictions (subject to change without notice) are visa-exempt.
The latest list of the visa-exempt nationals can be found on the South Africa Department of Home Affairs website: Department of Home Affairs – Exempt Countries (dha.gov.za).
Nationals from jurisdictions not listed must obtain a visa before traveling to South Africa by contacting the nearest South African mission abroad.
• The salary and benefits of any foreigner employed by the corporate applicant is not inferior to the average salary and benefits of citizens or permanent residents occupying similar positions in South Africa.
An applicant for a corporate visa must provide proof that at least 60% of the total staff employed in the operations of the business is citizens or permanent residents employed permanently in various positions. This proof is also required during the duration of the visa.
To qualify, the corporate applicant must conduct business in certain sectors, as published in the Government Gazette.
The immigration authorities determine, in consultation with prescribed departments, the maximum number of foreigners to be employed under a corporate visa.
The corporate applicant must undertake that it will take prescribed measures to ensure that foreign employees comply with the provisions of immigration legislation and the conditions of the corporate visa. In certain circumstances, the corporate applicant may be required to post financial guarantees to defray deportation or other costs in the event that the corporate visa is withdrawn.
A foreigner employed under the terms of a corporate visa must work only for the holder of that corporate visa.
Other requirements. Expatriates may not change employers or terms of employment without prior approval from the immigration authorities. If an expatriate does not comply with the conditions of his or her visa or if he or she contravenes the immigration legislation, the expatriate is classified as an undesirable person.
Employers must make a good faith effort to ascertain that no illegal foreigner is employed by them and to ascertain the status of the visa or citizenship of individuals employed by them.
Employers must keep prescribed records relating to employment up to two years after the termination of a foreigner’s employment. The employer must report to the immigration authorities termination of a foreigner’s employment and a breach by a foreigner of his or her status.
If an illegal foreigner is found on any premises where a business is conducted, the legislation presumes that the foreigner was employed by the person who has control over the premises, unless evidence to the contrary is provided. Stiff penalties in the form of fines and imprisonment can be imposed on both the employer and employee.
H. Self-employment
A business visa may be issued to a foreigner who intends to establish a business or invest in a business that is not yet established in South Africa.
Appropriate visas are issued to family members accompanying the business owner.
A business visa requires a minimum capital investment of ZAR5 million derived from abroad that is invested and retained in the book value of the business.
The business must comply with any relevant registration requirements of the SARS, Unemployment Insurance Fund, Compensation Fund for Occupational Injuries and Diseases, Companies and Intellectual Properties Commission and any relevant professional body, board or council recognized by South African Qualifications Authority.
The applicant must make an undertaking that at least 60% of the total staff to be employed in the operations of the business will be South African citizens or permanent residents employed permanently in various positions and submit proof of compliance with this undertaking within 12 months of issuance of the visa.
Confirmation of continued compliance with immigration legislation is required on a biannual basis.
A business visa may be issued for a period not exceeding three years at a time.
I. Other temporary residence visas
The following temporary residence visas may be issued:
• Study visa for individuals wishing to study in South Africa
• Dependent visa (visitor’s visa) for a spouse and minor children of an assignee who holds a valid work or business visa to accompany the assignee
• Treaty visa for individuals participating in a program established under a treaty
• Medical visa for individuals wishing to obtain medical treatment in South Africa
• Crew visa for officers or members of the crew of a public conveyance in transit in South Africa
• Relatives’ visa for individuals intending to visit relatives within the first step of kinship for up to 24 months (work not permitted)
• Spouse visa (Section 11(6) visitor’s visa) for a spouse of a South African citizen or permanent residence holder
• Retired persons’ visa for individuals intending to spend part or all of their retirement in South Africa (work not permitted)
• Exchange visa for individuals who are taking part in an exchange program of a public higher educational institution and for persons under the age of 25 who have completed their studies and intend to spend one year in South Africa to gain work experience in their field of study
• Asylum transit visa for individuals seeking asylum
• Cross-border visa for individuals regularly crossing the border at a port of entry
A remote work visa is applicable to individuals who will work solely for a foreign-based employer from South Africa and will not provide any services to a South African-based entity or client.
A religious leader’s visa is for qualified individuals from all religious backgrounds who lead religious sects.
J. Permanent residence
Permanent residence may be granted to the following individuals:
• Individuals possessing such skills or qualifications determined to be critical for South Africa as per a notice in the Government Gazette
• Individuals who have been married to, or living with, a South African citizen or resident for a minimum of five years
• Children under the age of 21 of a South African resident
• Children of a South African citizen
• Individuals who have held a South African work visa for five continuous years and have received an offer of permanent employment
• Individuals who intend to establish or have established a business
• Individuals who wish to spend their retirement in South Africa
• Individuals who have a net worth of at least ZAR12 million and pay a fee to the Department of Home Affairs of ZAR120,000 on approval of the application
• Individuals who derive an income of at least ZAR37,000 per month from a pension, irrevocable annuity or retirement account
• Individuals who are refugees referred to in Section 27(c) of the Refugees Act
• Individuals who hold a combination of assets realizing an income of ZAR37,000 per month
• Individuals who are relatives of a South African citizen or resident within the first step of kinship
A permanent residence permit may be withdrawn if the holder is convicted of specified offenses or fails to comply with the requirements of the permanent residence permit. Absence from South Africa of more than three uninterrupted years causes the permanent residence permit to be withdrawn.
K. Undesirable persons
An individual is declared undesirable when he or she overstays the validity of a current permit and leaves South Africa.
An individual who overstays for the first time for a period not exceeding 30 days is declared undesirable for a period of 12 months. An individual who overstays for the second time within a period of 24 months is declared undesirable for a period of two years. An individual who overstays for more than 30 days is declared undesirable for a period of five years.
L. Family and personal considerations
Marital property regime. Couples who solemnize their marriages in South Africa are subject to a community property regime that applies to all property. A prenuptial agreement may be concluded if a couple wishes to elect out of the community property regime. The regime does not apply to couples who do not solemnize their marriages in South Africa or to couples with a non-South African husband, unless they establish a marital domicile in South Africa by seeking a Supreme Court confirmation subjecting the couple to South African marriage legislation.
Forced heirship. South Africa does not have forced heirship rules.