My husband is in Namibia on a 3 month contract. He will be paid from a company in Namibia into his South African bank account where he is a RSA resident. He was informed that the company has put him on to their payroll and they will deduct Namibian tax.
Important:
This answer is based on tax law year ending 28 February 2017.
Answer:
From the information provided we accepted that you imply that the client is not deemed to be exclusively a resident of Namibia for purposes of the application of the agreement entered into between the governments of the RSA and Namibia for the avoidance of double taxation.
In terms of article 15.1 of the relevant treaty salaries, wages and other similar remuneration derived by a resident of the RSA in respect of employment is exercised in Namibia may be taxed in Namibia. We accept that the “Namibia company” is an employer who is a resident of Namibia (but nothing hangs on that) and the client didn’t derive director’s fees.
The point then is that the RSA can tax this remuneration – principally because he is a resident of the RSA and we tax on the basis of residency. South Africa provides relief for the double tax in one of two ways.
Section 10(1)(o)(ii) exempts from normal tax in the RSA “any form of remuneration received by or accrued to any employee during any year of assessment by way of any salary, leave pay, wage, overtime pay, bonus, gratuity, commission, fee, emolument or allowance, including any amount referred to in paragraph (i) of the definition of gross income in section 1 or an amount referred to in section 8, 8B or 8C in respect of services rendered outside the Republic by that employee for or on behalf of any employer, if that employee was outside the Republic…” for the required number of days – the 183 and 60 full days.
Section 6quat will only provide relief in the RSA if the section 10(1)(o), or to the extent that it, didn’t apply. We therefore don’t agree with your statement in this regard.
It is outside the scope of the service offered by us to comment on foreign tax laws. But, we can say that the individual will have to file a return there. A refund, if any, will then be made on assessment.