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THERE is a wide misconception in South Africa that living in a tax free country is financially profitable. Barry Pretorius writes:
To the contrary, not only is the cost of living high in comparison, but is also structured in such a manner to ensure that up to 70% of income earned is injected back into the country's economy.
READ: Taxing SA expats in Dubai: 3 points to consider
For example, a typical one bedroom apartment will rent in SA for approximately R6 000.00 per month. A similar apartment in the UAE could cost R35 000.00 per month. And there is little freedom of choice to find alternative lower priced accommodation in a predominantly locally controlled housing market.
To name education fees: A six-year-old scholar's school fees can run up to R140 000.00 per year. There are also many forms of tax such as on imported foods built into the overseas systems which are not VAT.
A tax system, based on SA tax scales, and current deductions would not "financially inconvenience" SA expats, it would place us in a position where we simply could not afford to pay the South African taxes.
We, as expats, are a mixed group of all ages/race/gender from young workers seeking international experience to older people trying to build some retirement funds as we do not have or receive pension funds abroad and must save our own.
READ: South African working in Dubai worried stiff over new tax plans
Many of us cannot find work in SA. However, we still contribute to the economy.
A SA worker coming abroad, under SA tax law, can claim a tax deduction of USD 190.00 per day. In the UEA it is a equivalent of R71 250.00 per month, which is a clear indication that SA recognizes the high costs of being abroad.
Under current SA tax laws if we were to be taxed, as expats, on our housing allowances/ schooling allowances on SA tax scales, we would be in the high tax brackets
This is not our home. Our intent is mainly to return to SA. Our accommodation abroad is not our primary residence. It's a place of doing business.
We need the tax laws to include exclusions on foreign income earned. This is more complex than just changing Section 10.1 the "183 day" article.
The South African Expatriates Tax Petition Group was founded to advance the interests of South African expatriates earning income outside of South Africa and who might become liable under new legislation to pay more taxes.
The group will focus on informing expatriates on developments in the promulgation of this legislation and provide a forum for expatriates to act as a uniform front to oppose legislation which might put them at an unfair disadvantage.
CALL OUT: Are you a South African working in a tax free jurisdiction and concerned over this new proposal? Share your views with Fin24 and get published.
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