South Africa Global Payroll & Tax Information Guide

October 25, 2021 | Yana Todorova 5 Mins read

Do you need assistance with global payroll services in South Africa?

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Payroll in South Africa – 2021 Updates

Due to covid-19, the following measures were taken by the South African authorities:

    • The introduction of a tax subsidy of up to R750 per month for the next four months for private sector employers who have employees earning below R6500. This subsidy will be provided under the current Employment Tax Incentive (ETI). ETI is an incentive aimed at reducing youth unemployment by encouraging employers to hire young work seekers-the employer can reduce the amount of PAYE it is required to pay.
    • Tax compliant businesses with a gross income of up to R100 million will be allowed to delay 35% of their Pay –As- You Earn (PAYE) liabilities over the next three months, without penalties or interest.
    • Tax compliant businesses in the alcohol sector can apply to the SARS for deferrals of up to three months for excise duty payments.

Read more about the emergency tax relief measures here.

Basic Facts about Payroll in South Africa

Instead of a single tax authority, employers must register and file with both the South African Revenue Service (SARS) and the South African Department of Labour. Tax contributions end up in Pay-As-You-Earn (PAYE – standard income tax withholdings), Standard Income Tax on Employees (SITE), Unemployment Insurance Fund (UIF), and Skills Development Levy (SDL). This means that employers must be registered at four tax destinations across two public entities.

Taxes

Income taxes are high in South Africa. Corporate income taxes are 28%, and income taxes range from 18-45%.

Many residents in South Africa makes wages from organizations outside the country. SARS labels these employees as provisional. Provisional employees must make tax payments to SARS much like U.S. self-employed/business owners pay estimated taxes before the end of the year.

Rates and Thresholds

Rates and Thresholds 2022 tax year (1 March 2021 – 28 February 2022)

How Withholding Works

South African employers withhold taxes owed from a non-provisional employee’s paycheck on a monthly basis using South Africa’s PAYE system. While there is no payroll tax in South Africa, there is a withholding tax.

The tax to be withheld from payments to the non-residents is at a rate of 7.5% for a non-resident individual, 10% for a non-resident company, and 15% for a non-resident trust that is selling the immovable property.

Tax Credits, Returns and Filing

The tax year begins on January 1 and ends on December 31. Employees are required to file their income tax returns by the end of January. SARS invoices the tax payer if they owe any taxes after they’ve filed their returns.

Compensation and Benefits

Minimum Wage

The monthly minimum wage from March 1, 2021 is R21,69 an hour.

Overtime

Up to 10 hours overtime per week is permitted. Employees earning below the threshold (R 205,433.30 per year) are paid 150% of their normal wage. Those above this threshold are not entitled to over time pay.

Hours of Work

The standard workweek is 45 hours or 9 hours daily.

Holiday & Leave

Employees are entitled to 15 days of paid leave, and employees with children may also receive 3 days of Family Responsibility Leave after they’ve stayed with their employer for 4 months. New mothers can take maternity leave – up to 4 months – but only without pay. South Africa has 13 national holidays in 2021.

Sick leave follows a three-year rotation and employees working 5 or 6 days a week are allotted 30 and 36 days respectively.

Foreign Hires

The corporate permit enables South African employers to employ a large number of foreign workers for a set period of time. Once your receive your permit, the foreign national employees can apply for their individual corporate workers visas.

Unlike most work visa or foreign worker permits, South Africa allows foreign hires to secure a work visa prior to employment on either a general work visa or critical skills visa. Work visas must be applied for prior to arriving in South Africa since the government does not permit visitors on tourist visas to apply for work or resident visas once they arrive.

 

For more information about how our Global Payroll Control Platform integrates with local payroll providers in South Africa, contact us today

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Using Payslip, we can manage all our payrolls across nine in-country vendors on one platform. When the global Covid-19 pandemic arose, it was not an issue from a payroll perspective, and critically getting everyone paid. The Payslip platform enabled continuity for our international payroll service including the fast and seamless implementation of the Payslip Employment Self Service during this time.

Colin Smith

Payroll Manager, LogMeIn

Payslip as a technology platform has added a missing piece in our payroll set-up. As an international company with offices in 16 countries, it’s important to us that every employee at GetYourGuide has the same great experience when accessing their pay data.

At the same time, we work well with smaller local payroll providers, supporting us with direct local expertise in their countries. We were able to combine those two elements by placing the Payslip platform in the middle, to simplify reporting and communication with local providers, and to have one simple employee-facing solution across all locations.

Julian Fichter

Head of HR, GetYourGuide

With business and employee growth rates of above 50%, we rely on our vendors to deliver on time, every time. Payslip’s workflow automation, enables Phorest to manage our payroll provider process – data driven, real time and transparent. Payslip saves us time so we can focus on our business growth.

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International Payroll Manager, Phorest

Payslip positions your team for success, and allows you to onboard hundreds of people when you need them very quickly and efficiently, in the same way for each country. The uniformed approach empowered our payroll teams to keep pace with our business.

Payslip also made our payroll process entirely transparent, which is invaluable to our payroll teams as we continue to grow and scale at such a rapid pace.

Travis Saville

HR Systems Lead, Wave