South Africa Global Payroll & Tax Information Guide
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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.
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.
Compensation and Benefits
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.
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