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Is income earned by a consultant working for the World Bank tax-free?

Thursday, 06 November 2014   (0 Comments)
Posted by: Author: SAIT Technical
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Author: SAIT Technical

Q: A consultant does consulting work for the World Bank. Work is done in RSA. Reports are sent to the World Bank. World Bank pays fees under an employee agreement. World Bank says to client that no tax is payable on the amount paid to the RSA taxpayer.

A: It is possible that the World Bank will not deduct employees’ tax (they may not be an employer in the RSA), but we are not aware that remuneration earned by a resident of the RSA from the World Bank is exempt from normal tax.  From the facts provided the taxpayer doesn’t meet the section 10(1)(o)(ii) requirements and therefore doesn’t qualifies for the exemption in respect of the foreign service.  We understand that the World Bank in some instances can provide a letter confirming that the income is in fact free from tax – this is normally in terms of an agreement with SARS / the Government.  As the client bears the onus of proof, we suggest that he obtains confirmation from the World Bank that the income is free from tax.  

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.



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