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SA pension taxed in Mauritius

Posted 6 May 2016 under Tax Questions



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Pensioner says:
5 May 2016 at 15:51

According to the SARS website if you are a resident of Mauritius you can apply for a directive to have your income from a South African pension to be taxed in Mauritius provided you supply proof of being a registered tax payer in Mauritius (part of the DTA agreement). Please can you confirm this as the difference in tax rates between the 2 countries is huge.

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TaxTimTaxTim says:
5 May 2016 at 17:06

There is nothing in the DTA with Mauritius to indicate this is the case:

1. Subject to the provisions of paragraph 2 of Article 18, pensions and other similar
remuneration, and annuities, arising in a Contracting State and paid to a resident of the other
Contracting State, may be taxed in the first-mentioned State.

This implies that should you be earning a pension in SA and paid to you as a resident of Mauritius then the tax can be levied in SA. However the DTA does provide for relief in the form of a credit or a refund from SARS of this amount which you can apply for - this information is available on the same info page on the SARS website.


Pensioner says:
6 May 2016 at 9:05

Thank you however according to the SARS website "A non-resident, who is a tax resident in the country of residence who receives income from a source in South Africa needs to apply for a directive for the relief from South African tax on pension and annuity income or wants a refund of tax that was withheld in terms of the SA Income Tax Act No. 58 of 1962 (the Act).

The request should be in terms of the Double Taxation Agreement (DTA) that is in place between SA and the
non-resident's country of residence."
Surely this means that if I am a resident of Mauritius that I can apply for a refund of the tax paid on the pension received in South Africa?


TaxTimTaxTim says:
6 May 2016 at 13:03

The website is indeed correct, however it speaks of countries where DTA's are in place that allow this provision. Your question was whether you can apply for an exemption directive which exempts the SA company from taking off tax. The DTA between SA and Mauritius does not allow for that under the section on Pensions. Not all DTAs are the same and each needs to be looked at as to the specific provisions allowed.

However regarding a refund, this is a separate issue and you should be able to receive a refund from SARS, but again the DTA is silent on this issue. You would have to make formal application to SARS and see their response. Other countries like Australia have this provisions specifically written into the DTA to avoid any doubt.


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