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Sars requires that you continue to withhold if the individual is not meeting the time abroad.
This also falls to the Double taxation in the treaty model with Tanzania.
Tanzania requires tax on sources of income in Tanzania as well.
SARs has written the treaty to include that if SARs can tax then they are first and any other relief would be applied based on the time abroad.
South African resident taxpayers who work abroad still need to declare their foreign income in their individual income tax returns. This income can however be exempted form South African tax by claiming a tax exemption where certain conditions of absence have been met. These conditions are:
This is an important exemption and South Africans working abroad must ensure that they qualify for the exemption.
If they do not, unfortunately they will pay tax in both.
Article 14Income from Employment 1. Subject to the provisions of Articles 15, 17 and 18, salaries, wages and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived there from may be taxed in that other State.
2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if: (a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve-month period commencing or ending in the fiscal year concerned; and (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State; and (c) the remuneration is not borne by a permanent establishment which the employer has in the other State.
The above is directly form the tax treaty between the 2 countries.
Article 21Elimination of Double Taxation Double taxation shall be eliminated as follows: (a) in South Africa, subject to the provisions of the law of South Africa regarding the deduction from tax payable in South Africa of tax payable in any country other than South Africa (which shall not affect the general principle hereof), Tanzanian tax paid by residents of South Africa in respect of income taxable in Tanzania, in accordance with the provisions of this Agreement, shall be deducted from the taxes due according to South African fiscal law. Such deduction shall not, however, exceed an amount which bears to the total South African tax payable the same ratio as the income concerned bears to the total income;
The employee may use the above and request a credit when they file their return with SARs but they will not be allowed a larger credit then the tax due to SARs.
The employer though will still need to withhold.
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