I have a medical specialist as a client. He is a VAT registered vendor, in private practice, operating as a sole proprietor (in his own name).
He went to Canada for 2 months (from mid-Dec to mid Feb) to locum there as medical specialist at a hospital. My question is twofold:
- Should the income he earned there (in Canadian Dollar) be added to his Output for VAT purposes?
- Should the income he earned there be included in his taxable income for provisional & annual income tax purposes?
I’ll appreciate your help a lot.
To answer your questions, please see my response below:
- This would be regarded as an exported service and should therefore be zero-rated for VAT purposes. It must be declared on his VAT return as a zero-rated supply but no VAT is payable on this (or rather VAT at 0% is payable which works out to the same thing)
- Yes, if he is a resident of South Africa then he must include his world-wide income in his taxable income and this must be factored in for provisional tax purposes as well as in his annual return. If any Canadian tax was paid or withheld he will be able to claim this as a foreign tax credit and this will be deducted (limited to the amount of SA tax payable on his foreign earnings) from his SA tax payable.
Hope that helps!
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