Expatriate Tax Planning for a Namibian Executive on International Assignment

A senior Namibian executive employed by a Namibian financial services company who had been seconded to the group's South African subsidiary in Johannesburg for 24 months under a tax equalisation arrangement.

The executive had been on assignment for seven months and neither he nor his employer had formally assessed his South African tax residency position, the interaction between his Namibian employment income and his South African tax liability, or whether the double taxation agreement between the two countries was being applied correctly. His South African employer was withholding PAYE under the South African system without coordination with his Namibian employer. The executive was concerned he was being overtaxed.

We assessed the executive's tax residency position in both countries, applying the ordinary residence test and the 183-day rule in Namibia and the South African residency tests. We reviewed the applicable DTA provisions and determined the correct allocation of taxing rights on his employment income. We coordinated with Andersen South Africa to calculate the correct South African tax liability and prepared a reconciliation of amounts withheld against the correct liability under the tax equalisation policy. We also prepared his Namibian tax return for the assignment year.

The executive had been overtaxed in South Africa. A refund was identified and processed through the South African tax system. His Namibian tax return was filed correctly, reflecting only the income taxable in Namibia for the relevant period. Both employers adjusted their PAYE processes for the remainder of the assignment. The executive has a clear picture of his cross-border tax position for the second year of the assignment.