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Lockdowns and travel bans may still affect expats

Despite some relief regarding tax exemption on foreign employment income.
Many were affected by travel bans in SA as well as the countries they hoped to return to. Image: Shutterstock

South African expats who were stuck in the country during the Covid-19 hard lockdown may still be adversely affected, despite a relaxation in the number of days they have to be physically outside South African to qualify for the R1.25 million tax exemption on foreign employment income.

National Treasury and the South African Revenue Service (Sars) proposed that the 183 days be reduced to 117, to compensate for the Level 5 and Level 4 lockdowns in South Africa when they could not leave the country.

However, industry players noted that this amendment may not be sufficient because even if they could leave SA there were still other international travel bans.

Submissions to Treasury

Both the South African Institute of Tax Professionals (Sait) and the South African Institute of Chartered Accountants (Saica) made submissions to Treasury, raising their concerns about potential adverse tax consequences for taxpayers despite the change.

The industry bodies noted the fact that they were not offered the opportunity to comment earlier on the change, as it was not included in the draft Taxation Laws Amendment Bill, nor was it part of the original tranche of Covid-19 tax relief. Their concerns forced them to make the submissions outside of the normal legislative process.

Read: Looming ‘expat tax’ is ultimately fair

The Sait personal income and employment tax work group says in its submission that foreign-sourced employment income earned between March 1, 2020 and February 28, 2021 and beyond would ordinarily have been tax exempt.

“However, as a result of the various lockdown regulations, the same foreign-sourced employment income would not be exempt due to the inability to meet the 183-day requirement.”


Sait adds that the premise on which the calculation is based (the 66 days) is that South African tax residents were prevented from leaving South Africa to take up employment abroad during lockdown levels 5 and 4. However, the SA lockdown was “complicated”, and continues to be, by travel bans that were implemented worldwide.

“These foreign country lockdowns or travel bans resulted in many individuals being unable to leave or enter South Africa to perform their duties in the country of residence; in the country where they were assigned; or in the country where their employer may be incorporated.”

Read: To financially emigrate or not?

David Warneke, chair of Saica’s national tax committee, says in its submission that although it appreciates the late relaxation of the number of days rule, the concern remains that the 66-day reduction on the 183 days is not sufficient.

Limited flights

“It was not that easy [or affordable] for many individuals to leave SA during the Level 3 lockdown period, as there were a restricted number of flights travelling during that time.”

He added that even if people were able to leave SA, they were unable to enter the countries where they were working due to travel bans imposed in those countries.

Both Saica and Sait referred to travel restrictions in Italy, Mexico, and Saudi Arabia, as well as some Chinese employers requesting South Africans not to return from their annual Christmas holidays in January.

Double taxation impact

Another concern raised by Warneke is that irrespective of the number of days that the individuals were stuck in SA,

…the remuneration earned during that time is regarded as being of a South African source, since the work was done in SA and not in the foreign country. It will be fully taxable in SA.

In the meantime, the foreign employer will withhold the foreign taxes from the remuneration, resulting in double taxation and no section 6quat relief would be available. Section 6quat relief is offered where the taxpayer’s income from work done in the foreign country has already been subjected to tax in that country.


Saica has proposed that the presence of an individual in SA (if it was as a result of travel restrictions related to Covid-19) should be disregarded.

It this is not accepted, Saica further proposed that a temporary relief measure be incorporated into the section dealing with foreign income tax exemption, by removing or reducing the requirement to be physically outside of SA when doing work for the foreign employer when they could not leave the country due to Covid-19 travel restrictions.

Saica also raised concern about the remaining requirement that 60 of the 183 days outside SA have to be continuous days.

Many will not be able to meet the requirement within the next 12-month cycle, since the lockdown has been going on for more than 200 days.

Warneke suggests that the entire travel restriction period, starting on the day the other country announced restrictions, must be considered as an addition to the 12-month cycle.

Sait’s working group proposed that the 66-day period be included as a minimum, with no burden of proof required. If the individual can prove that they were not able to travel to another country, the entire travel restriction period must be considered.

For instance, if the person was not able to travel to the foreign country before March 27 or after May 31, that period must be added to the 12-month period.

Listen to Nompu Siziba’s interview with Carrie Norden from Allan Gray (or read the transcript here):

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These immigrants want more rights than South African citizens?

BDV you are about as sharp as Busisiwe Mkhwebane.
So let me help you a bit, an expat is person who lives and or works outside their native country, an expat is not an immigrant, even Busi knows that.

End of comments.





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