Expatriate tax ebook - South Africa

What taxes?

Capital gains tax
Inheritance, estate and gift taxes
Investment income
Local taxes
Real estate taxes
Social security taxes
Stock options
Wealth taxes
Other specific taxes

Capital gains tax
Non-residents will be taxed on capital gains made from the disposal of the following assets:

• Immovable property situated in South Africa or any interest or right in immovable property situated in South Africa. The term “interest in immovable property situated in South Africa” includes a direct or indirect holding of 20% or more of the equity shares in a company and 80% or more of the current market value of the shares of that company are directly or indirectly attributable to immovable property situated in South Africa.
• Assets attributable to a permanent establishment in South Africa.

The first R20,000 of any capital gain made by an individual in a year of assessment is excluded from CGT and 25% of the balance is included in taxable income.

Inheritance, estate & gift taxes
Donations and estate duty are imposed at a rate of 20% on assets of a resident and on South African assets of a non-resident.

Investment income
The expatriate's South African tax residency status and source of investment income will determine whether investment income such as interest is liable to South African income tax.  Dividends received by, or accrued to any person (residents and non-residents) from a source within South Africa (resident companies) are exempt from tax.

Real estate tax
Transfer duty is payable by the purchaser on the purchase of fixed property

Rates of transfer duty for natural persons

Acquisition of property by persons other than natural persons – 8% of the value. 

This will be applicable to both residents and expatriates purchasing fixed property in South Africa. 

A withholding tax is generally payable when non-residents dispose of direct or indirect interests in immovable property in South Africa. Different withholding rates apply and exemption is available in certain circumstances.

Social security taxes
There are currently no social security taxes in South Africa, however, contributions to an Unemployment Insurance Fund (UIF) are payable as follows:

• 1% by the employer and 1% by the employee (the employer is obliged to withhold and pay the employee’s portion) however this is subject to a maximum contribution of R233.24 per month.

Stock options
Any gain made by the exercise, cession or release of any right to acquire any marketable security will be included in taxable income if the right was obtained in respect of employment services rendered in South Africa.

The tax liability will arise on the day that the option is exercised and is calculated as the difference between the amounts paid for the shares and the market value at the date the option is exercised, if the employee’s remuneration during any period of ownership was taxable in South Africa, such liability being apportioned on a reasonable basis.

Wealth tax
There is no wealth tax in South Africa. However, non-residents will be subject to capital gains on the disposal of immovable property situated in South Africa.  South African residents are subject to Capital Gains Tax on world-wide capital gains.

Other specific taxes

Skills development levy

In order to address the skills shortage in South Africa, a skills development levy in the amount of 1% of payroll applies to employers paying annual remuneration of R500,000 or more. The levy is utilised to support and encourage training initiatives.

Information about South Africa:

• facts and figures
• basis of taxation
• what taxes?
• tax planning opportunities

Last updated 16 June 2011

This information has been provided by Grant Thornton South Africa, a member firm within Grant Thornton International Ltd, and is for informational purposes only. Neither Grant Thornton South Africa nor Grant Thornton International Ltd can guarantee the accuracy, timeliness or completeness of the data contained herein. As such, you should not act on the information without first seeking professional tax advice.

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