It has been estimated that several thousand Americans are living in South Africa. Living in South Africa is an incredible experience for several reasons, including the cost of living, the friendly people, the economic stability, and the beaches, landscapes, and wildlife. As an American expatriate living in South Africa, though, what exactly do you need to know regarding filing US expat (and South African) taxes? Read on to learn more about South African expat tax in this guide for American expats in Africa.
As a non-resident, you will be required to pay tax on any income derived from sources in South Africa. Even though the regulations might grow rather complex, the following is a reasonable starting point:
Foreigners who live in South Africa are deemed residents if South Africa is the country where they have their most fixed and settled domicile, as defined by the Constitution (storing possessions there, etc.). Persons who spend more than 91 days in South Africa during the tax year and the five tax years before are considered residents under all other circumstances.
South Africa personal income tax rates are progressive to 45%.
| Taxable income (R) | Rates of tax (R) |
| Up to R205,900 | 18% of taxable income |
| R205,901–R321,600 | R37,062 + 26% of taxable income above R205,900 |
| R321,601–R445,100 | R67,144 + 31% of taxable income above R321,600 |
| R445,101–R584,200 | R105,429 + 36% of taxable income above R445,100 |
| R584,201–R744,800 | R155,505 + 39% of taxable income above R584,200 |
| R744,801–R1,577,300 | R218,139 + 41% of taxable income above R744,800 |
| R1,577,301 and above | R559,464 + 45% of taxable income above R1,577,300 |
You must pay taxes in South Africa if you:
There are exceptions to these regulations, such as if you are elderly or earn less than a specific amount per year. If you are a tax resident of South Africa, you must register as a taxpayer by visiting your local SARS location to verify your name, residence, and bank account information. The rest of the procedure can be completed online.
In South Africa, foreign residents pay the same income tax as locals. For expats relocating to South Africa, a number of nations, including Australia, Japan, Sweden, Thailand, the United Kingdom, and the United States, have tax treaties with South Africa, which can assist you avoid double taxation in your home country.
Foreign employment income received by a tax resident in excess of R1.25 million will be taxed in South Africa starting 1 March 2020, according to the tax tables in effect at the time. This applies to residents who spend more than 183 days outside of South Africa in any 12-month period during the assessment year, of which at least 60 days are continuous.
In South Africa, there is no tax on international pensions. Local pensions, on the other hand, are taxed at different rates depending on whether they are lump-sum or annuity payments. South Africa is a member of the Automatic Exchange of Information (AEOI) system, a new international standard aimed at combating cross-border tax evasion.
Withholding Tax on Interest or Royalties
Interest or royalties paid to or for the benefit of a foreign person outside of South Africa are subject to these two taxes. This is taxed at a rate of 15% in South Africa. The tax is owed by the foreign person, but it must be withheld by the person providing the payment. However, there are several exceptions.
Despite the fact that every US citizen and Green Card holder is required to file a tax return with the IRS regardless of where they live, many expats fail to do so. Many people are uninformed of their responsibilities, believing that as an expat, they are exempt from paying or filing taxes in the United States. You actually have to still pay taxes!
With so many important decisions to make, taxes may not be the first thing on your mind. But it’s worth taking a few minutes now to think about how you will file and pay your taxes as an expat in South Africa. TFX offers consultations with our team of experts that can help you determine the right tax structure for your specific situation.
This is a guest post by Veronica Rhodes from TFX.
TFX is a women-owned tax firm that offers all U.S. tax services — for both American citizens and non-citizens with U.S. tax filing requirements. From straightforward expat tax preparation to complex cases involving multiple factors — we've handled it all for over 25 years.
