How do you determine whether an SA tax resident working in Namibia will be taxed there?
30 June 2015
Posted by: Author: SAIT Technical
Author: SAIT Technical
Q: I have a
client who is employed by a Namibian company, he works in Namibia, his income
is paid in pounds sterling to his offshore account and he is taxed on that
income in Namibia. He is a SA tax resident due to the fact that he, his partner
and two children have lived in SA on a permanent residency basis since 2013.
We will be doing a 2015 tax return for him. Will his Namibian
income be taxed in SA? He has not fulfilled the 183 days/60 days section
10(1)(o) exemption rule.
I have looked at the DTA agreement between Namibia and SA
and it appears as though he will NOT be taxed on this income in SA??
A: You are
correct that Article 15.1 of the DTA provides that "Subject to the provisions
of Articles 16, 18, 19 and 20, salaries, wages and other similar remuneration
derived by a resident of a Contracting State (the RSA) in respect of an
employment shall be taxable only in that State (the RSA) unless the employment
is exercised in the other Contracting State (Namibia).” But, if "the employment is so exercised, such
remuneration as is derived therefrom may be taxed in that other State (Namibia).”
The last sentence is the relevant one.
This doesn’t give a sole right of taxation to Namibia and
the employee will have to rely on the section 10(1)(o)(ii) exemption – the 183
and 60 days one.
I have accepted that "he is a SA tax resident due to the
fact that he, his partner and two children have lived in SA on a permanent
residency basis since December 2013 (previously UK residents)”. You may want to confirm what his resident
status is in respect of the treaty. If
he ordinarily resident in the RSA it may not be relevant, but otherwise it may
Disclaimer: Nothing in this query and answer should be construed as
constituting tax advice or a tax opinion. An expert should be consulted for
advice based on the facts and circumstances of each transaction/case. Even
though great care has been taken to ensure the accuracy of the answer, SAIT do
not accept any responsibility for consequences of decisions taken based on this
query and answer. It remains your own responsibility to consult the relevant
primary resources when taking a decision.