Short-term assignees to South Africa |
By Jaco Le Grange, Associate Director, Deloitte
Deloitte Budget 2012 Expectations
Johannesburg, 23 January 2012 - In terms of the definition of “gross income” in section 1 of the Act, non-resident persons are taxable in South Africa on their South African sourced income only.
In the case of individuals, this means that they are taxable in respect of remuneration earned from services rendered in South Africa. South Africa does not have a de minimis rule, i.e., in the case of short term assignees, they would, in principle be taxable on any remuneration from a South African source.
International organisations are increasingly using short-term assignees instead of the traditional long-term assignees due to the costs involved with the latter approach and due to more intelligent and “just-in-time” resourcing of mobile specialists.
A strict source based approach creates administrative complexities even in circumstances where the taxable income of the particular individuals may be relatively small. The administrative complexities are as follows:
- The individuals mostly remain on the payroll in their home country. Since the South African resident entity normally does not take over the obligation to pay their remuneration, the individuals need to register as provisional taxpayers and submit annual income tax returns.
- Due to the, so-called, “economic employer” approach taken by the South African Revenue Service (“SARS”) in a Binding Private Ruling (“BPR”) (BPR085) (issued in June 2010) with regard to the determination of a person’s employer for DTA purposes, organisations need to evaluate every short-term assignment in order to establish whether the individual concerned qualifies for treaty relief or not. Again the associated administrative costs do not, in our view, justify the added revenue earned by the South African fiscus.
We therefore consider that a de minimis rule, eg. 30 days per annum, should be introduced. This rule will exempt remuneration earned by non-resident individuals for services rendered in South Africa if they have not spent more than 30 days in aggregate in South Africa during a tax year or in any 12 month period.
Last Updated:
Contacts
- Name:
- Kerri Lurie
- Company:
- Magna Carta (PR)
- Job Title:
- Phone:
- +27(0) 11 784-2598
- kerri@magna-carta.co.za
Material on this website is © 2013 Deloitte Global Services Limited, or a member firm of Deloitte Touche Tohmatsu Limited, or one of their affiliates. See Legal for copyright and other legal information.
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms.