The Taxation Of South Africa

1883 Words Nov 23rd, 2015 8 Pages
Just as an egg will vary from hen to hen, so do tax systems from country to country. Each country has its own rules and principles to levy taxes from its citizens and foreigners to whom it conducts business in order to support its operations. South Africa is no different. When a country’s own people conduct business, or foreigners invest or trade within its domestic jurisdiction, it is necessary for the tax system to balance carefully its domestic and international economic objectives. It is essential to understand how the taxation system is applied to residents and non-residents in order to maximize one’s own benefits through adequate tax planning. In South Africa, the law determines the tax system through which the Commissioner must oversee/enforce. Among all the tax acts, the Customs Act 91 of 1964, The Income tax Act 58 of 1962, and the VAT Act 89 of 1991 are the most important ones. South Africa employs a residence-based system. This means that, except for certain exclusions; residents are being taxed on their worldwide income regardless of where their income was earned. In other words, a resident of a particular country will be subject to the taxes of that country. Where as in the United States, all citizens, even if they are not a resident, may be subject to their worldwide income. South Africa has not always employed a residence-based system. Before 2011, a source-based system was being used. Income is taxed in the country where that income originates,…

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