Do I pay South African tax on income from foreign clients?

Yes. South African tax residents are taxed on worldwide income, so fees from foreign clients are taxable here regardless of where the client is based or which bank account the money lands in.

Which exchange rate should I use for foreign income?

Section 25D allows the spot rate on the date the amount is received or accrued, or the average exchange rate for the year of assessment. Apply one basis consistently and keep evidence of the rate used.

Can I claim tax withheld by a foreign client?

Where foreign tax has been paid on income South Africa also taxes, a section 6quat rebate may be claimed, limited to the South African tax attributable to that foreign income, and you must hold proof of the foreign tax paid.

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Foreign income and SARS: rand conversion and foreign tax credits

South African tax residents are taxed on worldwide income. If you invoice a client in New York, Berlin or Dubai, that income is taxable here whether or not it ever touches a South African bank account. The questions that matter are what rand figure to declare, and what relief you get for tax already paid abroad.

Residence, not where the client sits

If you are ordinarily resident in South Africa, or you meet the physical presence test, you are a resident for tax purposes and your worldwide income is in scope. The location of the client, the currency of the invoice and the bank the money lands in change none of that.

Converting to rand

Section 25D allows amounts in a foreign currency to be translated to rand at the spot rate on the date the amount is received or accrued, or alternatively at the average exchange rate for the year of assessment. Whichever basis you adopt, apply it consistently and be able to show your workings.

In practice the cleanest evidence is the actual rand amount credited by your bank, because it is independently verifiable on a statement. Where you need a market rate for a specific date instead, record the source and the date of the rate you used.

Spot rate on the date of receipt or accrual, or the SARS average rate for the year.
Keep the invoice, the remittance advice and the bank credit for each payment.
Note any bank or platform conversion fee separately — it is usually a deductible cost of earning that income.

Foreign tax credits (section 6quat)

Where a foreign country has taxed income that South Africa also taxes, section 6quat allows a rebate for the foreign tax paid, limited to the South African tax attributable to that foreign income. It is a rebate against tax, not a deduction against income, and you must hold proof of the foreign tax actually paid.

Double tax agreements can change the outcome — some treaties give the other country no taxing right at all, in which case the correct fix is to claim relief in that country rather than a credit here.

The section 10(1)(o)(ii) exemption usually does not help contractors

The foreign employment income exemption applies to remuneration received under an employment contract for services rendered outside South Africa, subject to the days test and a rand cap. Independent contractors invoicing for services are earning trade income, not remuneration, so the exemption generally does not apply. Do not assume it does without advice on your specific contract.

Evidence pack to keep

For five years after submission, keep for each foreign payment: the invoice, the contract or engagement letter, the remittance advice, the bank statement line showing the rand credited, the rate you used with its source, and any foreign withholding certificate.

Common questions

Do I pay South African tax on income from foreign clients?: Yes. South African tax residents are taxed on worldwide income, so fees from foreign clients are taxable here regardless of where the client is based or which bank account the money lands in.
Which exchange rate should I use for foreign income?: Section 25D allows the spot rate on the date the amount is received or accrued, or the average exchange rate for the year of assessment. Apply one basis consistently and keep evidence of the rate used.
Can I claim tax withheld by a foreign client?: Where foreign tax has been paid on income South Africa also taxes, a section 6quat rebate may be claimed, limited to the South African tax attributable to that foreign income, and you must hold proof of the foreign tax paid.

Sources

Rates, thresholds and penalty rules change each tax year. This guide summarises published SARS guidance for general information and is not professional tax advice.