Tax information: going to South Africa
Welcome to your tax guide going to South Africa, produced by Deloitte. Looking for tax information about leaving South Africa, Click here
This document has been prepared based on the legislation and practices of the country concerned as at 01 April 2009. Tax legislation and administrative practices may change, and this document is a summary of potential issues to consider. This document should not be used as a substitute for professional tax and immigration advice which should be sought for the country of arrival and departure in advance of moving in order to discuss your specific circumstances.
This information is provided by Deloitte in accordance with their terms and conditions. Neither HSBC nor Deloitte accepts any responsibility for the accuracy of any of this information. By using this information you are accepting the terms under which Deloitte is making the content available to you - click below to view these terms and conditions. It is strongly recommended that you read the terms and conditions by clicking below before continuing.
Terms and conditions
Click the 'plus' symbol or text for more information.
Click the 'plus' symbol or text for more information.
Before/once you arriveQ. Do I need a work permit to work in South Africa?
A. Yes. A valid work visa should be obtained prior to arrival in South Africa. Application must be made to the South African Embassy, High Commission or Consulate General in your home country, at least six weeks in advance of the intended commencement date of employment in South Africa. Temporary work permits can be issued for between 12 to 36 months depending on the category and renewal of the permit depends on the category and contract of employment. Further information is below.
Visas: permits and residence
A valid passport is required by all visitors.
Visitor's visas: These are issued provided the holder does not take up employment and provided the passport is valid for 30 days beyond the intended length of stay.
Temporary residence: Passport holders of the US, UK, Canada, the EU and some other countries do not require visas for stays of less than 90 days for tourist purposes. An outward ticket must be purchased before entering South Africa.
Driving licenses: Visitors can drive with a home country license for up to 6 months but it must have a photograph and be in English, Afrikaans or Dutch.
Q. Should I complete any documentation upon arrival in South Africa?
A. If you earn in excess of R60,000 during a tax year, you are required to register for tax in South Africa. You should do so when you are as soon as you start earning this amount.
The Application for Registration as a Taxpayer (Form IT77), should be completed and submitted to the office of the South African Revenue Service ("SARS") in the magisterial district where you live.
Q.
Is it beneficial to use an offshore bank account (situated outside South Africa) in comparison to an account in South Africa?
A. Offshore bank accounts do not provide tax benefits from a South African perspective but they may be useful from a home country tax perspective. Exchange control procedures mean that a contract worker paid by a South African company can transfer abroad funds accumulated during their stay in South Africa provided the individual can substantiate the source of such funds and that the value of such funds is reasonable in relation to their income generating activities in the South Africa during the period.
Q. What is the name of the South African tax authority?
A. South African Revenue Service (SARS)
The website is http://www.sars.gov.za/
Q. What is the tax year?
A. 1 March to 28/29 February.
Q. How will I be taxed in South Africa?
A. In general, if you become tax resident in South Africa you will be subject to South African tax on worldwide income. If you are a non-resident of South Africa you will be subject to South African tax on income related to services performed in South Africa irrespective of where the income is paid. Non-residents generally are entitled to the same deductions and personal rebates as are residents.
Q. How is tax residence determined?
A. As an individual arriving in South Africa you can establish tax residence in one of two ways, either through physical presence, or through ordinary residence.
The term "Ordinarily resident" is held to mean the country where your permanent home is located, and to where you intend to return.
In addition, you will be regarded as resident in South Africa if you are physically present there:
(1) for more than 91 days during the current tax year as well as each of the five preceding tax years and
(2) for a total of 915 days during the five preceding tax years
Thus, you would generally only become resident in South Africa in your sixth year.
Q. Are there any regional or state taxes?
A. No.
Q. Can I file a joint tax return with my spouse?
A. No. Each individual taxpayer must file a return.
Q. What rate of tax will I pay in South Africa?
A. The following tax rates apply for year of assessment commencing 1 March 2009:
| Taxable income exceeds R | But does not exceed R | Tax payable |
| 0 | 132,000 | 18% |
| 132,000 | 210,000 | 23,760 +25% |
| 210,000 | 290,000 | 43,260 + 30% |
| 290,000 | 410,000 | 67,260 +35% |
| 410,000 | 525,000 | 109,260 + 38% |
| 525,000 + | 152,960 +40% |
Q. What tax allowances and deductions are available in South Africa?
A. Allowances
The following rebates are provided to taxpayers filing returns in South Africa for the year commencing 1 March 2009:
Primary R9,756
65 years and over* R5,400
*Additional to primary rebate.
Deductions
The following deductions are provided to taxpayers in South Africa (subject to limitations):
• Contributions to South African pension funds
• Retirement annuity fund contributions
• Medical expenses
- Over 65 years of age: Unlimited, and
- Under 65 years of age: Expenses exceeding 7% of taxable income
• Donations to approved public benefit organisations e.g. universities, other educational establishments, and certain charitable organisations in South Africa.
Q. I will also be paying tax in my home country. Am I being taxed twice?
A. No. South Africa has entered into income tax treaties with many countries providing for an exemption or reduction in the statutory tax rates for certain types of income. It may also be possible to claim a foreign tax credit on your home country return for the South African taxes paid on double taxed income. The method of avoiding double taxation will depend upon your situation, and the nature of the treaty agreement between your home country and South Africa. You should seek professional tax advice in both countries for preparation of tax returns.
Q. Do I need to file a South African tax return?
A. If you receive taxable income in excess of R120,000 during a tax year and earn income other than employment income, you will be required to file a tax return. The income tax due is paid to SARS upon assessment. Tax return forms need to be requested by the taxpayer (or your service provider).
The tax return can be submitted electronically via efiling.
Where a taxpayer has been assessed for tax and fails to pay any amount due under the assessment within the time frame allowed, interest is payable on the amount outstanding at a prescribed rate, currently 13.5%.
Q. When does it need to be filed?
A. The annual income tax return must be submitted by July/November following the close of the tax year ending on February 28/29 depending on the type of submission, i.e. manual or via efiling. SARS stipulate an exact date for each tax year in which the return is issued.
Q. Can the filing deadline be extended?
A. No. As a result of the introduction of efiling, extentions will not be granted by SARS as the submission deadline via efiling is generally on a later date than the manual submissions.
Q. What is the procedure for paying tax?
A. In general, employment taxes are withheld monthly by employers from employees’ remuneration, and are credited against the final tax liability upon assessment. Employee taxes are classified as:
• Standard Income Tax on Employees (SITE) is a non-refundable employee tax applicable to the first R60,000 per year of remuneration earned by employees from standard employment.
• Pay As You Earn (PAYE) is a tax applicable to remuneration in excess of
R60,000. Remuneration is broadly defined to include salaries, wages, commissions, bonuses, fringe benefits, pensions etc.
Taxpayers who receive income which is not subject to employees’ tax, e.g. passive investment income or where individuals are not on the local payroll are subject to the provisional (estimated) tax provisions. Provisional taxpayers must pay income tax on a six monthly basis.
The first provisional payment which is due by the end of August each year is based on the “basic amount.” The basic amount is the lesser of the most recent assessment received by the taxpayer, or the estimated tax for the year. The “basic amount” may not be Rnil where there is a new registration.
The second provisional payment is due by the end of February each year. This is based on actual income received during the tax year. The estimated actual taxable income must be at least 80% of actual final income in order for interest and penalty charges to be avoided.
Q. Will non-cash compensation be taxable (e.g. housing)?
A. Generally, benefits such as assignment premiums, cost-of-living allowances, primary and/ or secondary school tuition for children, language lessons for family, cash allowances, and tax-equalization reimbursements are included in taxable income.
However, tax relief is available in respect of certain benefits and expenses, as follows:
• Accommodation provided to international assignees while away from their usual place of residence may be treated as tax free for the first 24 months from date of arrival, provided that the rental contract is entered into between the company and the landlord, the lease payments are made directly by the company to the lessor, the rental amount (including utilities, etc) is less than R25,000 per month and the assignee has not been present in South Africa for a period exceeding 90 days in the tax year immediately preceeding his/her assignment.
• Relocation expenses equal to one month’s basic salary may be exempt from income tax.
• Educational expenses may not be taxable where a grant is made available exclusively to an employee and this is not linked to any forfeiture of pay.
• Assets awarded for long service.
• Subsistence allowances where an employee is travelling on business away from their place of residence for at least one night.
These are all subject to limitations and advice should be sought.
Q. I will be working in different countries while living in South Africa. Will all of my employment income be taxable in South Africa?
A. South African tax and ordinarily residents are subject to tax in South Africa in respect of their worldwide income.
Non tax residents are subject to tax on employment income related to services physically performed in South Africa, irrespective of where it is paid. As such, it is possible to pro-rate an assignee's income to exclude the income relating to work days the assignee was physically absent from South Africa in a tax year so that only income relating to South African duties is taxed .
Please note that part of a day is counted as a full day in South Africa.
Q. Will I pay South African tax on investments and rental income generated in my home country?
A. If you are a resident for South African tax purposes, you are taxable on your worldwide income including passive investment income and capital gains. Worldwide dividends and interest are taxed at the normal staggered tax rates. Local dividends earned in South Africa are exempt from tax in South Africa. Interest income earned up to R21,000 by individuals under the age of 65, is exempt from tax in the 2010 tax year. Interest income earned up to R30,000 by individuals over the age of 65 is exempt from tax in the 2010 tax year.
Rental income and royalties are taxed at the normal staggered rates, after expenses are deducted (e.g. mortgage interest).
Tax relief should be available in respect of double taxed income. The method for mitigating double taxation will depend upon the specific agreement between South Africa and your home country.
Non tax residents of South Africa are subject to tax only on income from South African sources.
Q. Is there a Capital Gains Tax regime in South Africa?
A. Yes. Capital gains (or losses) in excess of the R17,500 exemption, are included in income and taxed at marginal rates. Individuals have 25% of the gain included in income and taxed at their marginal rate (max 40%), creating an effective tax rate of 10%. Certain exemptions and exclusions also exist.
If you cease to be tax resident you will be deemed to have disposed of all your worldwide assets at their market value at the date you cease to be resident, with the exception of immovable property situated in South Africa, including interests and rights therein as well as assets attributable to a “permanent establishment” in South Africa.
Non residents are only subject to capital gains tax on fixed property situated in South Africa.
Q. Is my home country pension plan tax efficient for South African purposes?
A. Probably not. It is likely that your home country scheme does not qualify under South African law and therefore your contributions will not be deductible for South African tax purposes.
It may be possible to obtain some tax relief if a tax treaty exists between South Africa and your home country dealing with this.
Q. Will my home-country tax efficient savings be effective in South Africa?
A. Probably not. Most non-South African savings vehicles are not tax efficient for South African purposes.
Q. What do I need to know about any other tax regime, e.g. Inheritance, Estate or Wealth tax?
A. If a taxpayer is ordinarily resident in South Africa at the time of death, all assets, wherever situated, form part of the total value of the estate, on which liability for estate duty will be determined. The estate is subject to estate duty if the net value of the estate exceeds R3.5 million. SARS are currently reviewing the use of the current abatement. Duty of 20% is payable on the excess. As an exception, assets situated outside South Africa are excluded if they were acquired by the deceased before becoming tax resident in South Africa for the first time, or were acquired from a non-resident by way of an inheritance or gift. Estate duty is currently levied at the rate of 20% on the net value of the estate.
A person who is not ordinarily resident in South Africa at the time of death will only be subject to estate duty on all immovable and moveable property situated in South Africa and licences, patents, etc. registered or enforceable in South Africa or attached to any trade in South Africa.
Gifts and Donations Tax
Donations tax is payable at a flat rate of 20% on taxable donations made by persons tax resident in South Africa. Donations tax is not due where the property donated by a donor does not exceed R100, 000 during any year of assessment.
Donations made by persons not tax resident in South Africa are generally not subject to donations tax.
Transfer duty
Transfer duty is levied by the State on all transfers of ownership of immoveables such as land and certain interests in land. Transfer Duty is payable at the following rates on transactions which are not subject to VAT -
| Value of Property (R) | Rate |
| 0 – 500,000 | 0% |
| 500,001 – 1,000,000 | 5% |
| 1,000,001 and above | 8% |
For any transfers to a corporate entity or trust the rate is 8%.
Value-Added Tax ("VAT")
VAT is charged on the supply of goods or services and on the importation of goods or services, by any person, at the rate of 14%. The Value-Added Tax Act provides that non-residents qualify for a VAT refund on items purchased and subsequently taken out of the country. VAT refunds will only be made where the non-resident removes the goods from South Africa within 12 months of the date of original tax invoice.
No VAT refunds will be granted to foreign nationals or to their spouses if they work in South Africa on a temporary work permit.
Q. Am I required to pay South African Social Security?
A. Currently no South African social security system exists. Certain payroll and other taxes are imposed, mainly on the employer. South Africa has not entered into any Social Security agreements with other countries.
Q. Are there any other levies payable in South Africa?
A. Yes. Unemployment Insurance Fund (UIF) Contributions and Skills Development Levies (SDL) are payable. However, non-resident employees who are foreign nationals are excluded from this contribution to the extent that they are employed on a contractual basis.
Skill Development Levy is payable at a rate of 1% of taxable income by the employer.
