Corporate Income Tax
Corporate income tax rate is 28%
Tax year 1st March to end February
Businesses must register with SARS as a tax payer and submit an annual tax return 12 months after the end of the relevant tax year.
Businesses are also required to supply provisional tax returns every six months and pay tax based on estimated figures for that period.
Income Tax Rate
- 0 – 174,550: 18%
- 174,550 – 272,700: 25%
- 272,700 – 377,450: 30%
- 377,450 – 528,000: 35%
- 528,000 – 673,100: 38%
- 673,100+: 40%
Time to prepare and Pay Taxes
Employers Social Security and statutory contributions
Unemployment Insurance Fund (UIF). Employers contribute to the fund at a rate of 1% of the employee’s remuneration up to earnings of ZAR 178,464
Note than an expatriate’s employment income is normally exempt from UIF, subject to certain conditions being met.
Employees Social Security and statutory contributions
Unemployment Insurance Fund (UIF). Employees contribute to the fund at a rate of 1% of the employee’s remuneration up to earnings of ZAR 178,464.
Note that an expatriate’s employment income is normally exempt from UIF, subject to certain conditions being met.
There are specific rules for payroll and taxation in South Africa, depending upon whether your company employs foreign nationals or South Africans. South Africa taxes residents on their worldwide income, whereas non-residents are taxed only on income sourced in South Africa or deemed to be from a source in South Africa.
Any business that employs at least one employee must register with the South African Revenue Service (SARS) for Pay As You Earn (PAYE) and Standard Income Tax on Employees (SITE). Businesses employing staff must also pay a gross revenue or salary-related levy to the district council. Once registered, the business is charged services levies based on its total bill for salaries and wages, as well as on gross sales.
The primary concerns for a foreign company that needs to comply with tax laws in South Africa are: individual income tax for employees, unemployment insurance, payroll tax, VAT tax, withholding tax, business income tax and permanent establishment concerns.
A remote payroll in South Africa is where a foreign company, i.e. a non-resident company, payrolls a resident employee in South Africa. One option for a non-resident company is to payroll its employees (local and foreign) in South Africa is to use a fully outsourced service like a GEO, which will employ and payroll the staff on their behalf.
Local Payroll Administration
In some cases, a company will register their business in South Africa under one of the forms available, (Branch Office or Company) but prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. However, the payroll calculations, payments and filings can all be outsourced to the payroll provider.
Larger companies with a commitment to South Africa may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a South African payroll, and can fulfill all tax, withholding, and payroll requirements.
This approach carries significant costs and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with South African employment laws.