Organisations often request guidance on the South African tax position for foreign nationals working in the country under diplomatic arrangements. A recent query concerned foreign nationals residing in South Africa on diplomatic visas and paid by their country of origin. The central question: Do South African payroll or tax obligations apply in these circumstances?
In general, foreign nationals entering South Africa on diplomatic visas do so in connection with official diplomatic missions. These individuals typically operate under the authority of their home government and are not engaged in business activities on behalf of that government within South Africa.
The Diplomatic Immunities and Privileges Act 37 of 2001 governs the immunities and privileges available to:
The extent to which the Act applies depends on the specific diplomatic classification of the individual, which must be confirmed on a case-by-case basis.
“Salary paid to foreign government officials stationed in South Africa may be exempt from normal tax when statutory conditions are met.”
From an income tax perspective, Section 10(1)(c)(iii) of the Income Tax Act 58 of 1962 provides a relevant exemption.
Under this provision, salary and emoluments paid to an official of a foreign government are exempt from normal tax in South Africa when:
Where these conditions are met, the income earned from the foreign government is not taxable in South Africa.
Because diplomatic categories and privileges can differ between individuals, employers should verify:
In cases where diplomatic status is confirmed and the statutory exemption applies, foreign government officials stationed in South Africa are generally not subject to South African normal tax. However, as the application of exemptions depends on the specifics of each case, confirming the employee’s diplomatic classification is vital.
