ARTICLE · 23 OCTOBER 2019

Foreign Earnings Exemption

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The South African Revenue Service (SARS) has just released two publications regarding the revised foreign earnings exemption, namely a draft version of Interpretation Note 16 (Issue 3) ...

South AfricaTax

Patricia Williams

The South African Revenue Service (SARS) has just released two publications regarding the revised foreign earnings exemption, namely a draft version of Interpretation Note 16 (Issue 3) (Draft IN16) and a SARS guide with frequently asked questions (FAQs).

South African employers with employees who qualify for the exemption, and South African residents working offshore must take note of these two publications.

The two publications deal with the revised foreign earnings exemption as provided for in section 10(1)(o)(ii) of the Income Tax Act, 1962 (the ITA).

The exemption was originally introduced in 2000 to avoid the scenario where an individual's earnings is taxed both in South Africa and in a foreign jurisdiction. It provides for qualifying foreign earnings to be exempt from income tax in South Africa.

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