My client has recently become a permanent resident in South Africa. He is employed by the World Bank (IFC) and is based in S.A. He has informed me that his salary is tax exempt by virtue of his employer. He receives in his personal name & foreign dividends.
Important:
This answer is based on tax law for the year ending 28 February 2020.
Answer:
We accept that the individual is deemed to be exclusively a resident of the RSA for purposes of the application of any agreement entered into between the governments of the Republic (RSA) and Switzerland for the avoidance of double taxation. If so, he will have to submit a return of income.
It is outside the scope of the service offered by us, which is limited to giving guidance only, to advise or comment on whether or not the interpretation of the taxpayer is correct.
The exemption in with regard to the remuneration is found in section 10(1)(c) (in this instance probably items (iv) – (vi)) of the Income Tax Act. It generally then applies to “any salary and emoluments payable to any subject of a foreign state” who is either temporarily employed in the RSA or not ordinarily resident in the RSA. The other requirement is that “the exemption of such salary and emoluments is authorized by an agreement entered into by the governments of such foreign state” or the relevant institution and the RSA. If the client is a resident of the RSA this would not be available.
We are aware that some of these arrangements include RSA residents. In such a case, it would be best to obtain the confirmation, which would be in writing, from the World Bank directly. It may well be that the ‘article’ that you are referring to is found an agreement as envisaged in section 10.