Here's How The Taxman Will Come After South African Expats

If you have a good job overseas‚ living in a country where the tax rate is 25%‚ but your salary falls into South Africa's 45% tax bracket‚ the taxman now wants to come after you to collect the difference of 20%.

Jerry Botha‚ a managing partner at Tax Consulting‚ said the draft tax law amendments for 2017‚ which have been published by National Treasury‚ propose a far harsher tax treatment on people earning their livelihood abroad.

He said the draft law recommends that the exemption section 10(1)(o)(ii) be completely repealed.

"This means foreign employment income will become fully taxable‚ and the only relief may be claimed is foreign taxes paid as a tax credit. For example‚ where the employee falls into the 45% tax bracket and pays 25% tax in the foreign country‚ the SARS will now collect the difference of 20%‚" he explained.

The current tax law determines that South African tax residents abroad must disclose their world-wide income to the South African Revenue Service (SARS)‚ and may then claim an exemption on their employment income physically earned outside South Africa.

The then Minister Pravin Gordhan announced in his 22 February 2017 Budget Speech that changes to this section were on the horizon. The suggestion was made that the exemption should not apply where the employee is not being taxed in the foreign country.

"There are limited options for South Africans abroad‚ should this law take effect‚" Botha said.

"One alternative would be to properly emigrate‚ in which case there is a deemed disposal capital gains tax event. SARS probably anticipates this likely move‚ as the 2016/17 tax return now has a specific disclosure hereon‚ which never previously existed.

"Other taxpayers are looking at establishing tax treaty residency in another country‚ but this is not as simple as getting a tax residency certificate somewhere else. Anyone who has been through a SARS process (on this) would know how complex this may become.

Botha said this move by the taxman could see more South Africans doing a cost estimate and possibly returning home.

"We have seen some expatriates indicating that with full tax on international employment income‚ which is what is effectively proposed‚ coupled with the high costs of international work‚ coming home may be their only alternative‚" he said.

The comment deadline on the draft law is 18 August 2017. It is set to take effect from 1 March 2019.

TIMESLIVE 2017 https://www.timeslive.co.za/news/south-africa/2017-07-20-heres-how-taxman-will-come-after-south-african-expats/ date of access 20 Oct 2017

Japan

Individual - Taxes on Personal Income

In Japan, permanent resident taxpayers are taxed on their worldwide income. Non-resident taxpayers are taxed only on their Japan-sourced income. Non-permanent resident taxpayers are taxed on their Japan-sourced income plus potentially part of their non-Japan-sourced income that is paid in or remitted to Japan.

Personal income tax rates

The current national income tax rates are:

Taxable income (JPY)

Over (column 1)                Not over                              Tax on Column 1 (JPY)   Tax on excess (%)

0                                           1,950,000                                                                           5

1,950,000                             3,300,000                            97,500                                   10

3,300,000                             6,950,000                            232,500                                 20

6,950,000                             9,000,000                            962,500                                 23

9,000,000                             18,000,000                          1,434,000                              33

18,000,000                           40,000,000                          4,404,000                              40

40,000,000                                                                      13,204,000                            45

The tax liability is determined by multiplying the excess taxable income for each bracket by the percentage above and adding the cumulative tax figure (see the Sample personal income tax calculation section for more information).

Surtaxes

A surtax took effect 1 January 2013. The surtax is comprised of a 2.1% tax that is assessed on an individual’s national income tax.

Local income taxes

Generally, in Japan, the local inhabitant’s tax is imposed at a flat rate of 10%. Japanese local governments (prefectural and municipal governments) levy local inhabitant’s tax on a taxpayer’s prior year income. This applies where the taxpayer is a resident of Japan as of January 1 of the current year. For local inhabitant’s tax purposes, an equalisation per capita tax is also assessed. The standard annual amount is JPY 5,000, while this may vary based on the prefecture/municipality in which the taxpayer resides. Local inhabitant’s tax is not deductible.

Non-residents

A non-resident taxpayer’s Japan-source compensation (employment income) is subject to a flat 20.42% national income tax on gross compensation with no deductions available. This rate includes 2.1% of the surtax described above (20% x 102.1% = 20.42%).

Anon.  2017. Japan individual - taxes on personal income http://taxsummaries.pwc.com/ID/Japan-Individual-Taxes-on-personal-income Date of access 20 Oct 2017