International tax is tax you pay on income you earn in another country, regardless of its source.
But, international tax can carry with it various problems. So, to avoid them, follow these 5 rules:
Don't try hide international tax from the South African Revenue Service (SARS).
We're all part of a global village, so tax commissioners will communicate with each other. And they are very much aware of the array of methods tax evaders use. So the chances of being caught are very high.
So don't be foolish here.
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Make sure you always use the most recent double tax treaty.
Ensure you always have the latest double tax treaty between South Africa and the country you'll transact in.
Articles can change or differ for each country. So, if you're unsure, speak to a registered tax practitioner.
Determine the residency as well as the source of the transaction. Are you resident in the foreign country you're carrying on trade? Are you aware of any specific source rules in that country?
Calculate the estimated taxes due on the transaction so you can budget for them.
If there aren't any taxes due, you'll have a calculation based on the double taxation treaty and the South African Income Tax Act to prove to SARS and the foreign commissioner if they tax you incorrectly.
Always be prepared beforehand.
Apply the conversion rates correctly. This can make a huge difference under Section 25D
. If you have to use a spot rate, but use the average rate, you could receive a horrible surprise.
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