Green has criticised plans put forward by the country’s Revenue Services (Sars) to domestically tax those who earn overseas.
Currently, South African citizens working in another country for more than 183 days each year do not pay tax on income earned overseas.
However, under plans announced in the February Budget, a draft policy document published Wednesday removed that exemption.
Draconian move
Green said: “The plans by Sars to drop this exemption is going to hit the many hundreds of thousands of South Africans who choose to live and work outside South Africa.
“The move is totally unjust and breaks the cornerstone principal of taxation: that the taxpayer receives government services for their taxes, such as healthcare, education, roads and police services.”
He continued: “These plans are highly discriminatory. It is simply unfair to tax someone because of their citizenship. Indeed, residence and/or territoriality are the only criteria upon which a fair income tax system should be based.
“This draconian move to double tax South African expats effectively shackles them to South Africa and they would no longer enjoy the same freedoms as almost everyone else in the world.
“Under these proposals, they would be persecuted for living abroad.”
How it will work
The current expectation is that income earned abroad will be taken into account by Sars and any shortfall will have to be made up by the taxpayer, with tax paid to the local revenue or government where it is earned taken into account.
For example, if a person falls into South Africa’s 45% tax bracket and pays 25% tax in a foreign country, they would pay the 20% difference to Sars.
Those in non-tax jurisdiction, however, would be liable to pay the whole 45%.
Citizen-based taxation
Green added: “There are only two other countries in the world that maintain this outdated, misguided and wrong citizen-based taxation (CBT) regime: the US and Eritrea.
“There is a growing campaign for the US to change from this system to residence-based taxation enjoyed by the rest of the planet.
“It is achingly regressive for South Africa to be looking to adopt CBT and to do so would put the country on the wrong side of history.”
Call to action
The Draft Rates and Monetary Amounts and Amendment of Revenues Laws Bill is open for public comment until 18 August.
The deVere chief executive urged “all South Africans at home and overseas who care about freedom and prosperity to make their opinions heard”.
“This move to scrap the tax exemption for South Africans who live and work overseas is not the way forward for a modern, democratic nation.”
