South African expats fear losing tax exemption
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South Africans living abroad are fuming.
Many will now be forced to come home after the Treasury announced a proposal to remove the foreign employment income tax exemption for South African expatriates.
This means that those who make money from overseas employment could now be taxed domestically on their earnings.
Magda Schoeman, who has lived in Dubai for the last few years, will have no choice but to come back to South Africa.
“There’s no way we would survive in Dubai if it happens. We have made plans to come home. Most South Africans here, live on their credit cards, have loans to consolidate their debt in South Africa and we all have families which we support financially in South Africa,” she said.
Wesley Green, a doctor working in Ghana, said he too would have to return home should the legislation be passed.
“Here, everyone is taxed 25% across the board. Now Sars wants to come after the remaining 20% (as I now fit into the 45% tax bracket in rand terms). This changes everything. Our government is making it extremely difficult, as a qualified medical doctor, to find a job, whether at home or abroad.”
Amanda Greef, who is working as a teacher in South Korea, is completely against the proposal.
“It’s heartbreaking. I’m quite despondent. Our government does not care for us, but I love my country. I’ve had to look at options like financial immigration. I don’t really want this because my family and friends live in South Africa. But the proposal, will push me to immigrate, just to make a living. I’m not getting any younger,” said Greef.
Barry Pretorius, who has lived abroad for 18 years, but is currently working in Abu Dhabi, recently started a petition against the change to foreign employment income-earned tax laws.
The petition has already received support from more than 3000 expatriates.
He said that while he didn’t mind paying tax, the South African government would have to be fair.
“It has to be doable. The proposed system isn’t. Because of the exchange rate, you are very quickly placed into a high tax bracket, and that would make it impossible to pay.
“If South Africa’s tax scales are applied unilaterally, we could not pay it. If I had to pay 20 to 40% tax I would default.”
“The majority of people in the Middle East are in the same position. Our country will turn us into tax aliens and tax criminals.”
Meanwhile, global headhunting firm for Africa, Homecoming Revolution, said they weren’t too pleased with the proposal.
“It may make people return home because it is too costly to work abroad, but we want people returning for the right reasons - if they choose to, not because they are forced to,” said Angel Jones, the chief executive of Homecoming Revolution.
Jones said they had many concerns with the proposal.
“It will make working overseas less attractive. Even though we’re a headhunting firm that wants to bring people back, we actually do encourage people to get international experience.”
“The second concern is that it may make South Africans abroad give up their dual nationality. If they revoke their South African citizenship because of this, then we have lost them forever.”