A comparison of the tax effects for South African, French and Japanese employees working abroad

Abstract

Globalisation might become the catchword of the 20th century. In the period following World War II technological innovations have effectively changed planet earth to “One World” (Straubhaar&Wolter, 1997). As a result of this, employee migration and its effects, has gained in significance. Individuals can now easily choose to work anywhere around the globe. Opportunities for skilled professionals are rapidly increasing, and individuals are capitalising on these opportunities. In recent years much attention has been directed, within OECD countries, to the emigration of highly qualified persons attracted to countries where job opportunities are more plentiful and research funding more generous (Dumont&Lemaître, 2005). In an empirical study, conducted by Liebig and Sousa-Poza (2005), it was stated that, besides expected wages and job opportunities, the costs of migration and the subjective evaluation of a location, two other factors help determine the expected net return from migration: taxes and network effects. This study is aimed at comparing the tax consequences for South African, Japanese and French employees working abroad. It is clear from the information obtained that the relevant countries have very different tax systems. In each of these three countries tax residency is a fundamental principle as residents are taxed on worldwide income while non-residents are taxed on income only from a source within that particular country. However, the principals and factors that are considered in determining tax residency differ between the countries. This difference in determining tax residency has an impact on the tax consequences for employees working abroad as the taxability of amounts earned from abroad is dependent on one‟s residency status. Furthermore, the conditions for exemption of amounts earned from abroad for tax purposes differ between the countries. AFRIKAANS : Globalisering kan die slagspreuk van die 20ste eeu word het. In die tydperk ná die Tweede Wêreldoorlog het tegnologiese innovasies die planeet aarde effektief verander na "Een Wêreld" (Straubhaar&Wolter, 1997). As gevolg hiervan het werknemer-migrasie en die gevolge daarvan meer belangrik geword, aangesien individue nou maklik kan kies om op enige plek ter wêreld te gaan werk. Geleenthede vir geskoolde professionele werkers neem vinnig toe, en individue benut hierdie geleenthede. Baie aandag is in die afgelope jaar in die Organisasie vir Ekonomiese Samewerking en Ontwikkeling lande geskenk aan die emigrasie van hoogs gekwalifiseerde persone wat na lande gelok is waar werkgeleenthede meer algemeen en navorsingsbefondsing ruimer is (Dumont&Lemaître, 2005). In 'n empiriese studie het Liebig en Sousa-Poza (2005) dit gestel dat, naas die verwagte lone en werkgeleenthede, die koste van migrasie en die subjektiewe evaluering van 'n plek, twee ander faktore bydra om die verwagte netto-opbrengs van migrasie te bepaal: belasting en netwerkgeleenthede. Hierdie studie is daarop gemik om die belastinggevolge vir Suid-Afrikaanse, Japannese en Franse werknemers wat in die buiteland werk, te vergelyk. Dit is duidelik uit die inligting wat verkry is dat die betrokke lande baie uiteenlopende belastingstelsels het. In elk van hierdie drie lande is inwonerstatus 'n fundamentele beginsel, omdat inwoners belas word op wêreldwye inkomste, terwyl nie-inwoners belas word op inkomste wat slegs uit 'n bron binne daardie spesifieke land verdien word. Die beginsels en die faktore wat oorweeg moet word in die bepaling van inwonerstatus verskil tussen die lande. Hierdie verskil in die bepaling van inwonerstatus het 'n impak op die belastinggevolge vir werknemers wat in die buiteland werk, as die belasbaarheid van die bedrae wat in die buiteland verdien word, afhanklik is van 'n individu se inwoner status. Verder verskil die voorwaardes vir die vrystelling van die bedrae wat uit die buiteland vir belastingdoeleindes verdien is, tussen die lande. Copyright