The Tax System Of South Africa

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As there aren’t two eggs are identical, tax systems are vary from country to country. Each country

has its own rules and principles to levy taxes from its citizens and foreigner to whom conducts business in

South Africa to support the operation of its country. When a country’s own residents or citizens conduct

business or trade abroad, or foreigners invest or trade within its domestic jurisdiction, it is necessary for

the tax system to which has impact on these activities to be balance carefully with domestic and

international economic objectives. It is essential to have knowledge and to understand how the taxation

system is applied to residents and non-residents to maximize one’s own benefit by having adequate tax
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Income is taxed in the country where that income originates,

irrespective of the legal or physical residence of the recipient of income under the source based tax

system. Even though South Africa Adopted the residence based system in 2011, many states still will tax

the income derived by a person from commercial activities undertaken in their states, hence a source

based system of tax imposes a taxation liability on income arising within a specific jurisdiction or


From the Appellate Division of Kerguelen Sealing & Whaling Co., Ltd v CIR ˡ, the fundamental

logic of a residence based tax system has been contrasted to that of a source based system in the

following: “In some countries residence (or domicile) is made the test of liability for the reason,

presumably, that residents, for the privilege and protection of residence, can justly be called upon to

contribute towards the cost of good order and government of the country that shelters

1. See e.g. Kerguelen Sealing &Whaling Co., Ltd v CIR, 1939 AD 487, 10SATC:363

him. In others (as in ours) the principle of liability adopted is ‘source of income’: again, presumably, the

equity of the levy rests on the assumption that a country that produces wealth by reason of its natural

resources or the activities of its inhabitants is entitled to a share of that wealth, wherever the recipients of

it may be live. In both systems there is, of course, the assumption that the country adopting the
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