We are expecting additional pressure in 2018 on tax changes as SARS and the National Treasury seek to find 50 Billion Rand to make up the budget deficit. It is vital that we grow our member numbers to have a strong platform from which to lobby and oppose taxation levied on South Africans earning an income abroad.
Our membership numbers are steadily growing, and we wish to thank those whom have started making contributions to our nonprofit organization as we approach this Christmas holidays and festive season.
We have attended this treasury workshop on behalf of the TPG members and the following are highlights of the workshop:
1. National Treasury (Treasury”) invited stakeholders to attend a consultative workshop to discuss certain technical issues raised regarding the current tax legislation and possible amendments thereto. These were held at the Development Bank of Southern Africa and the matter of section 10(1)(o)(ii) was discussed on the 6th of December 2017.
2. The purpose of the workshop was for Treasury to obtain clarification on certain items that were raised in the submissions made to Parliament, and the amendment of section 10(1)(o)(ii) of the Income Tax Act (“the foreign income exemption”) was one of many items which were discussed.
3. For purposes of this consultative session, Treasury specifically invited comments on the issues raised in respect of the possibility of double taxation, the burden of proof of foreign taxes paid and aligning the treatment of parastatal employees and employees in the private sector under this provision. The following can be distilled from the discussions:
3.1. It was pointed out to Treasury that its proposal of obtaining hardship directives from SARS to address the issue of double taxation presents difficulties. The fact that such directives would need to be obtained for each individual employee would create a surge in applications, placing a massive administrative burden on SARS. Where any of your members have examples hereof, we ask that they should please be forwarded to us.
3.2. It was further noted that there is no indication of what will serve as sufficient proof of taxes paid in foreign jurisdictions, and that proof that will be accepted by SARS might be very difficult to source, particularly from certain African jurisdictions. Where any of your members have examples of countries where employers pay foreign taxes and those are not directly reported on employee personal tax returns, we ask those please be forwarded to us.
3.3. Treasury acknowledged the practical and administrative concerns raised and noted that the provision will need to be revisited for possible further amendment and clarification.
3.4. Treasury noted further that there are certain items that were not included in the agenda at this juncture, and that these items are still being considered.
4. As the amendment to the foreign income exemption is set to only take effect on 1 March 2020, there will be further opportunity to address other concerns surrounding this amendment. Most important is the proposed limit on the exemption, which is a far more complex issue. The motivation to change the limit on the exemption will need to be substantiated by precise calculations and concrete information.
5. Therefore, it is paramount that we continue our engagement with Treasury and make use of all the upcoming opportunities to make sound representations to ensure that individuals working abroad are treated fairly under this provision.
Facebook Group: https://www.facebook.com/TaxPetitionGroup