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The guy I was talking to on Zoom lives in Cape Town, works remotely for a Dubai company and earns a good income.

He and his wife are thinking of living in Dubai for half of every year so that they will not be deemed to be South African residents. They figured they would save 45% tax because he’s on the maximum marginal tax rate.

It seemed like a good idea as Income Tax in Dubai is zero.

There are a number of factors that he missed. I didn’t ask what his income is, so let’s work on R2m a year gross.

  • His tax in South Africa is 36,7%, not 45%, because only the last bit is taxed at 45%.
  • Non-residents are taxed in South Africa on the source basis. Half his income, or R1m, will be from a South African source and will be taxed here.
  • The cost of living in the two cities affect the buying power of his net income.

I suggested that we did the Big Mac cost of living comparison.

A Big Mac costs R31 in South Africa and R88 in Dubai.

I suggested that he should compare the rental cost of accommodation and the cost of food to get a more accurate comparison.

Of course, he could simply Google “Compare cost of living in Cape Town with Dubai”. The answer that comes up indicates that Dubai cost of living is about double that of Cape Town. This indicates that his cost of living for a full year spent 1/2 in each city would increase significantly. But the trouble with that is that someone else determined the shopping basket with which to make the comparison.

However, using this data the comparison works out like this –

So, don’t live in Dubai just to save tax!


  1. If he has received the R2m from an offshore employer, ALL the income is “offshore income”, regardless of his location while earning it.
    The income is not regarded as part local & part offshore based on his location.

    Income is only “local” if received from an entity based in SA.

    The deduction of R1.25m applies to the total offshore income provided he meets the requirements for time outside of SA.
    He could also spend the entire year in Dubai (or elsewhere) and, if he is SA tax resident, the entire R2m is taxable in SA (subject to credit for any overseas taxes paid and the rules of any double taxation agreement/s).

    As PAYE is not being deducted by his employer, he needs to submit provisional tax returns.

    1. Hi again Dave,
      Don’t agree with you on that one. ” in respect of services rendered outside the Republic by that employee for or on behalf of any employer, if that employee was outside the Republic”

  2. The tax calc is not correct. Tax rules for offshore earnings changed in 2018.
    He remains a tax resident in SA and declares R2million earnings.
    If he meets the criteria for time or the country (min 60 days continuous & ~186 days total in the year), he claims a deduction against taxable income of R1.25 million and pays tax on R800,000.

    1. Hi Dave,
      s10(1)(o)(ii) The first R1,25m of income earned offshore is deducted from the R2m taxable income, but he only earned R1m offshore so he will be taxed on the R1m earned in South Africa per my calculations

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