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Why Grant Thornton
Whether you’re growing in one market or many, looking to operate more effectively, managing risk and regulation, or realising stakeholder value, our firms can help.
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Culture and experience
Grant Thornton’s culture is one of our most valuable assets and has steered us in the right direction for more than 100 years.
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Global scale and capability
Beyond global scale, we embrace what makes each market unique, local understanding on a global scale.
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Join our network
In a world that wants more options for high quality services, we differentiate in the market to grow sustainably in today’s rapidly changing environment.
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Leadership governance and quality
Grant Thornton International Ltd acts as the coordinating entity for member firms in the network with a focus on areas such as strategy, risk, quality monitoring and brand.
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Africa
24 member firms supporting your business.
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Americas
31 member firms, covering 44 markets and over 20,000 people.
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Asia-Pacific
19 member firms with nearly 25,000 people to support you.
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Europe
53 member firms supporting your business.
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Middle East
8 member firms supporting your business.
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Business consulting services
Our business consulting services can help you improve your operational performance and productivity, adding value throughout your growth life cycle.
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Business process solutions
We can help you identify, understand and manage potential risks to safeguard your business and comply with regulatory requirements.
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Business risk services
The relationship between a company and its auditor has changed. Organisations must understand and manage risk and seek an appropriate balance between risk and opportunities.
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Cybersecurity
As organisations become increasingly dependent on digital technology, the opportunities for cyber criminals continue to grow.
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Forensic services
At Grant Thornton, we have a wealth of knowledge in forensic services and can support you with issues such as dispute resolution, fraud and insurance claims.
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Mergers and acquisitions
We work with entrepreneurial businesses in the mid-market to help them assess the true commercial potential of their planned acquisition and understand how the purchase might serve their longer-term strategic goals.
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Recovery and reorganisation
Workable solutions to maximise your value and deliver sustainable recovery.
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Transactional advisory services
We can support you throughout the transaction process – helping achieve the best possible outcome at the point of the transaction and in the longer term.
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Valuations
We provide a wide range of services to recovery and reorganisation professionals, companies and their stakeholders.
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IFRS
At Grant Thornton, our IFRS advisers can help you navigate the complexity of financial reporting from IFRS 1 to IFRS 17 and IAS 1 to IAS 41.
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Audit quality monitoring
Having a robust process of quality control is one of the most effective ways to guarantee we deliver high-quality services to our clients.
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Global audit technology
Our global assurance technology platform provides the ability to conduct client acceptance, consultations and all assurance and other attestation engagements.
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Corporate and business tax
Our trusted teams can prepare corporate tax files and ruling requests, support you with deferrals, accounting procedures and legitimate tax benefits.
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Direct international tax
Our teams have in-depth knowledge of the relationship between domestic and international tax laws.
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Global mobility services
Through our global organisation of member firms, we support both companies and individuals, providing insightful solutions to minimise the tax burden for both parties.
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Indirect international tax
Using our finely tuned local knowledge, teams from our global organisation of member firms help you understand and comply with often complex and time-consuming regulations.
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Transfer pricing
The laws surrounding transfer pricing are becoming ever more complex, as tax affairs of multinational companies are facing scrutiny from media, regulators and the public
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Africa tax desk
A differentiating solution adapted to the context of your investments in Africa.
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Banking Holding banking to account: the real diversity and inclusion pictureWe explore how the banking sector can continue to attract, retain and nurture women to build a more diverse and inclusive future.
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Sustainability From voluntary to mandatory ESG: How banks can future-proof their operationsAs we move from voluntary ESG initiatives to mandatory legislation, we explore what the banking sector needs to prioritise.
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IFRS IFRS 9 - Audit of Expected Credit LossesGPPC releases The Auditor’s response to the risks of material misstatement posed by estimates of expected credit losses under IFRS 9
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growthiQ Steering your company to long-term successHistory has something important to tell us about the difficulties of steering a business to long-term success – through seismic shifts in technology, consumer demands and product development. With that in mind it’s unsurprising that over half the world’s largest companies in the early 1900s had shut their doors by the late 1990s. Some, however, have endured.
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International Financial Reporting Standards Implementation of IFRS 17 ‘Insurance Contracts’The auditor’s response to the risks of material misstatement arising from estimates made in applying IFRS 17 ‘Insurance Contracts’
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IFRS Get ready for IFRS 17After twenty years of development the IASB has published IFRS 17 ‘Insurance Contracts’, find out more.
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Global business pulse - industry analysis Mid-market recovery spreads to more industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
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Global business pulse - industry analysis A very uneven recovery across industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
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Global business pulse - Sector analysis Clear patterns of damage from COVID-19 across the industriesThe index results for 12 key sectors of the mid-market reveal just how much or little the various parts of the economy were impacted by COVID-19.
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Not for profit Mission: possible – putting impact at the heart of charityGlobal charitable continues to decline and charity leaders are increasingly looking at their own unique impact journey.
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Access to finance Raise finance to invest in changePrepare your business to raise finance to invest in change.
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Private equity firms Private equity in the mid-market: reshaping strategies for 2021When the global COVID-19 pandemic stormed across the globe in early 2020, the private equity sector was hit hard but deals are coming back to the market.
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Mid-market businesses Getting ready for private equity investmentOur specialists explore how private equity firms are now working with their portfolios and how the mid-market can benefit from investment.
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Mid-market businesses Myth-busting private equityNervous about partnering with Private Equity? We explore some of the common myths we come across when speaking to mid-market businesses about PE investment.
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Public sector Helping build the government of tomorrow, todayLearn about the Grant Thornton US public sector team.
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Global business pulse - industry analysis Mid-market recovery spreads to more industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
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Global business pulse - industry analysis A very uneven recovery across industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
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Global business pulse - Sector analysis Clear patterns of damage from COVID-19 across the industriesThe index results for 12 key sectors of the mid-market reveal just how much or little the various parts of the economy were impacted by COVID-19.
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Industries European Real Estate PodcastJessica Patel, Tax Partner at Grant Thornton UK speaks with tax partners and directors across the network to share their insights on the real estate market and some of the challenges.
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Industries European Real Estate PodcastJessica Patel, Tax Partner at Grant Thornton UK speaks with tax partners and directors across the network to share their insights on the real estate market and some of the challenges.
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Global business pulse - industry analysis Mid-market recovery spreads to more industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
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Global business pulse - industry analysis A very uneven recovery across industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
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Global business pulse - industry analysis Mid-market recovery spreads to more industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
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Global business pulse - industry analysis A very uneven recovery across industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
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Retail How retail is positioning for successCOVID-19 provided some hard lessons for the retail industry. It is time to turn those into sustainable and well executed growth strategies in 2021.
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Telecoms Can tech and telecom leverage economic headwindsAs most businesses brace for an economic downturn, tech and telecom could see new prospects. But, to turn the headwinds to your advantage, you need to find your unique opportunities and risks.
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Technology Mid-market tech companies lead the way on diversity and inclusionWe explore how the mid-market tech sector can continue to build and nurture a culture that’s increasingly more diverse and inclusive for women.
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Tax Resetting global tax rules after the pandemicBusinesses are seeing rising challenges, and finance heads are dealing with a range of new measures. To say the next 12 months are critical for businesses is an understatement.
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TECHNOLOGY International tax reform: the potential impact on the technology industryIn this article, we’ve summarised key elements of the global tax reform proposals, their potential impact on technology industry and advice from our digital tax specialists on what technology companies can do to prepare.
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Telecoms Can tech and telecom leverage economic headwindsAs most businesses brace for an economic downturn, tech and telecom could see new prospects. But, to turn the headwinds to your advantage, you need to find your unique opportunities and risks.
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TMT TMT industry: Fully charged or on standby?Our research revealed five key trends that resonated with Technology, Media and Telecoms (TMT) industry leaders around the world. We asked a panel of our experts from UK, US, India Ireland and Germany, to give us their reaction to the findings.
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Cybersecurity One size fits nothingTechnology companies must adopt a new approach to digital risk: those that successfully develop a reputation for digital trust by demonstrating an unwavering commitment to cyber security and data privacy will be able to carve out a competitive advantage.
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Technology, media & telecommunications Why it’s time for a 5G reality checkFigures suggest the mobile sector is maturing. While data usage continues to soar, mobile revenues are expected to flatten out over the next few years.
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International business Mid-market businesses lifted by rising tide of optimismOptimism among global mid-market business leaders rose to 67% in the first half of this year and they are markedly more optimistic about their prospects with global optimism having increased by 8%.
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Global business pulse - industry analysis Mid-market recovery spreads to more industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
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Hotels COVID-19: Checking in with the hotel industry one year onCOVID-19 provided some hard lessons for the hotel sector. It is time to turn those into sustainable and well executed growth strategies.
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Global business pulse - industry analysis A very uneven recovery across industriesThe index results for 13 key industries of the mid-market reveals a very uneven recovery from COVID-19
- By topic
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Women in Business 2024
2024 marks the 20th year of monitoring and measuring the proportion of women occupying senior management roles around the world.
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COP28: Mid-market firms should seize the opportunity from adaption and innovation
COP28 was the first time there has been a global stocktake on progress against the Paris Agreement.
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Scanning the horizon: Mid-market sets sights on global trade growth
The latest International Business Report (IBR) data shows that mid-market businesses have high expectations for global trade.
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Mid-market sees business optimism reach record high
Grant Thornton's latest International Business Report (IBR) sees optimism among mid-market business leaders reach a record high with 74% optimistic about the outlook for their economy over the next 12 months.
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Women in tech: A pathway to gender balance in top tech roles
Grant Thornton’s 2024 Women in Business data suggests we are far from achieving parity within the mid-market technology sector.
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Women in leadership: a pathway to better performance
What makes the benefits of gender parity compelling is the impact it can have on commercial performance.
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Women in Business 2024
2024 marks the 20th year of monitoring and measuring the proportion of women occupying senior management roles around the world.
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Women in business: Regional picture
We saw an increase in the percentage of senior management roles held by women, on a global level, but there are some significant regional and country variations.
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Pathways to Parity: Leading the way
To push towards parity of senior management roles held by women, who leads within an organisation is vital.
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Generating real change with a long-term focus
The most successful strategy to achieve parity of women in senior management is one which stands alone, independent of an ESG strategy.
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People at the heart of great business
Businesses have started to put guidelines and incentives in place, focused on driving employees back to the office.
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Focusing and developing a solid strategy around diversity, equity and inclusion
Grant Thornton Greece is pioneering a growing set of diversity, equity and inclusion (DE&I) initiatives that centre around three strategic pillars.
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Ten considerations for preparing TCFD climate-related financial disclosures
Insights for organisations preparing to implement the International Sustainability Standards Board (ISSB)’s Standards.
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COP28
COP28 was the first time there has been a global stocktake on progress against the Paris Agreement.
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Transition Plan Taskforce publishes its final disclosure framework
As organisations in the private sector make commitments and plans to reach net zero, there's a growing need for stakeholders to be able to assess the credibility of their transition plans.
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Promoting ESG excellence through tax
ESG considerations have never been more important for an organisation’s long-term success, but how can tax be used to add value to an ESG agenda?
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International business: Mid-market growth and expansion
The mid-market looks to international business opportunities for growth.
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Top five constraints to international business in the mid-market
Top five major constraints that are testing the mid-market’s ability to grow their businesses internationally.
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Brand and international marketing – breaking global barriers
Brand has been identified as a key driver of mid-market success when looking to grow and develop international business.
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The key to international business: Investing in people
How can recruitment and retention help grow international business?
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Building resilience in international business
Evolving supply chains and trade patterns amid ongoing global uncertainty.
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IFRS Alerts
IFRS Alerts covering the latest changes published by the International Accounting Standards Board (IASB).
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Example Financial Statements
General guidance for preparers of financial statements that supports the commitment to high quality, consistent application of IFRS.
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Insights into IFRS 2
Insights into IFRS 2 summarises the key areas of the Standard, highlighting aspects that are more difficult to interpret and revisiting the most relevant features that could impact your business.
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IFRS 3
Mergers and acquisitions are becoming more common as entities aim to achieve their growth objectives. IFRS 3 ‘Business Combinations’ contains the requirements for these transactions.
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IFRS 8
Our ‘Insights into IFRS 8’ series considers some key implementation issues and includes interpretational guidance in certain problematic areas.
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IFRS 16
Are you ready for IFRS 16? This series of insights will help you prepare.
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IAS 36
Insights into IAS 36 provides assistance for preparers of financial statements and help where confusion has been seen in practice.
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IFRS 17
Explaining the key features of the Standard and providing insights into its application and impact.
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Pillar 2
Key updates and support for the global implementation of Pillar 2.
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Global expatriate tax guide
Growing businesses that send their greatest assets – their people – overseas to work can face certain tax burdens, our global guide highlights the common tax rates and issues.
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International indirect tax guide
Navigating the global VAT, GST and sales tax landscape.
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Global transfer pricing guide
Helping you easily find everything you need to know about the rules and regulations regarding transfer pricing and Country by Country reporting for every country you do business with.
Understanding and navigating tax laws in a new country is particularly challenging. Expatriates taking up employment in South Africa (SA) and their employers may be subject to income-tax, employees’ tax, and social security related regulations.
At SNG GT, the tax implications of movements of employees at all levels are considered by a multi-disciplined team. Considerations will generally include whether a Permanent Establishment (PE) will be created by the employee, Corporate Tax and Value-Added-Tax implications, implications for the affected employee and implications for the employer.
The SNG Grant Thornton Employees’ Tax and Global Mobility Services team can assist expatriates and their employers with a clear and easy process aimed at avoiding confusion and uncertainty in unfamiliar territory.
Click on each of the areas below to expand for more information:
In SA, foreign nationals are usually required to apply for a work permit or temporary visas prior to taking up employment in SA. Work permits or temporary visas for work are issued by the Department of Home Affairs. The different types of visas are, general work visas, critical skills visas and intra-company transfer work permits.
SNG GT currently does not offer the services of assisting with visa applications.
The SA tax year for individual taxpayers begins on 1 March and runs to the last day of February the following year. i.e., 2024 tax year began from 1 March 2023 and will end on 28 February 2024.
Registration
Taxpayers are required to register for tax in SA. A person who becomes liable for income tax must register as a taxpayer with the South African Revenue Service (SARS) within 60 days after becoming liable for tax.
A foreign employee who is taxable on employment income in SA, but who is being remunerated by a foreign employer who does not have an agent having the authority to pay remuneration in SA, must register and pay provisional tax. See other taxes.
There are three ways that one can register for income tax in SA:
- Auto registration for Personal Income Tax - when you register for SARS eFiling for the first time and you do not have a tax reference number, SARS will automatically register you and issue a tax reference number. This is applicable when you have a valid South African ID.
- Register through your Employer via SARS eFiling - SARS eFiling offers the SARS registration function which allows employers to submit employee income tax registrations to SARS.
- Visit a SARS Branch – a request to visit the SARS branch could be done through the SARS eBooking system.
The following information is required to register for income tax in SA.
- Proof of residential address (e.g., utility bills, rental agreement), not older than 3 months;
- Proof of bank details, not older than 3 months; and
- Proof of identity, i.e., ID, passport.
Annual tax returns
The Commissioner of SARS gives public notice on an annual basis of the persons who are required to furnish returns for the assessment of normal tax.
How is tax calculated
The rules in the Income Tax Act for determining the taxable income of a person are as follows:
Gross Income
(Less) Exempt Income
(Less) Deductions and allowances
Add Specific Inclusions
Add Taxable portion of allowances (e.g., travel allowance)
Add Capital gains
(Less) assessed loss brought forward (where applicable)
= Taxable Income
Gross Income
Gross Income is the total amount (excluding amounts of a capital nature) received by or accrued to a non-resident/foreigner in each year of assessment, from a source within SA. Generally, it will include the remuneration and bonuses, benefits, and allowances.
Other types of income that may be included as gross income of a non-resident would be, rental income from SA source, interest received subject to certain exemption and dividends received subject to certain exemptions.
Exemptions
- The SA Income Tax Act provides for a number of exemptions and a non-resident individual working in SA may qualify to claim the exemptions in relation to pensions and other employment benefits.
- SA interest earned by a non-resident is exempt from normal tax, unless the non-resident was physically present in SA for more than 183 days during 12 months preceding date of receipt or the debt from which the interest arises is connected to a permanent establishment of that person in SA.
- SA dividends are also exempt from normal tax.
- Royalties earned by non-resident are exempt from normal tax, unless the non-resident was physically present in SA for more than 183 days during 12 months preceding date of receipt or the royalty payment is effectively connected to a permanent establishment of that person in SA.
- Certain qualifying expenditure in relation to employee relocation/resettlement may be exempt from normal tax in SA, if the expenses are reimbursed by the employer to the employee and the employee is able to provide proof of actual relocation expenditure incurred.
- The taxable value of the fringe benefit in relation to the residential accommodation provided by an employer to an expatriate is exempt up to R25 000 per month for a two-year period. The tax-free period commences on the date of arrival of the employee in SA for the purpose of performing the duties of his or her employment. The exemption does not apply if the person was in SA for a period of 90 days in the tax year prior to the year in which that person arrives in SA to perform the duties of employment
The other line items from the calculation of taxable income are covered below under the basis of taxation.
The due date for submission of the individual income tax returns is published annually in the Government Gazette.
The tax season normally starts on the first day of July and ends sometime between October and December (for non-provisional taxpayer) and in January (for provisional taxpayer) as determined by the Commissioner. i.e., the 2024 filing season may start on 1 July 2024
The SA tax system is based on the principle of adding together all sources of income of a taxpayer into a single sum and applying a progressive tax rate table with a maximum of 45% to determine the final tax liability of the taxpayer on assessment. A progressive tax rate system means that the more income is earned, the higher is the marginal tax rate and more tax is paid on assessment. You will see below the individuals’ tax table for the 2024 tax year (1 March 2023 – 28 February 2024):
Taxable income (R) | Rates of tax (R) |
1 – 237 100 | 18% of taxable income |
237 101 – 370 500 | 42 678 + 26% of taxable income above 237 100 |
370 501 – 512 800 | 77 362 + 31% of taxable income above 370 500 |
512 801– 673 000 | 121 475 + 36% of taxable income above 512 800 |
673 001 – 857 900 | 179 147 + 39% of taxable income above 673 000 |
857 901 – 1 817 000 | 251 258 + 41% of taxable income above 857 900 |
1 817 001 and above | 644 489 + 45% of taxable income above 1 817 000 |
A taxpayer earns the following income for the 2024 tax year:
- Basic salary R950 000
- Bonus R150 000
- Pension fund fringe benefit R90 000
- Medical aid fringe benefit R72 000
- Interest income from SA R22 000
Income | ||
Basic salary | R950 000 | |
Bonus | R150 000 | |
Pension fund fringe benefit | R90 000 | |
Medical aid fringe benefit | R72 000 | |
Interest income from SA | R25 000 | |
Total Gross income | R1 287 000 | |
Exemptions | ||
Interest income from SA | R22 000 | |
Total Exemptions | -R22 000 | |
Deductions | ||
Pension fund contributions (Limited to a maximus amount of R350 000) | R90 000 | |
Total Deductions | -R90 000 | |
Taxable Income | R 1 172 000 | |
Tax | R380 039 | |
Less Primary Rebates | -R17 235 | |
Less Medical Tax Credits (for 1 member) | -R4 368 | |
Tax Payable (in 2023 tax year) | R358 436 | |
Monthly tax | R29 869.67 |
SA operates a residence basis of taxation. This means that, if a person is an SA tax resident, he/she will be subject to tax in SA on his/her worldwide income (subject to certain exemptions and exclusions) and worldwide capital gains.
However, if a person is non-resident in SA, he/she will only be subject to tax in SA on income derived from a source within SA and on capital gains derived from the disposal of immoveable property located in SA, or any interests therein.
An individual will qualify as a tax resident of SA if he/she is ‘ordinarily resident’ in SA or if he/she meets the requirements of the ‘physical presence’ test.
There are thus two distinct tests in establishing whether a natural person is resident in SA – firstly, the criterion of whether he or she is ‘ordinarily resident’ in SA, and secondly, the criterion of the requisite physical presence in SA. These two tests are mutually exclusive. Below we will discuss the criteria for the first test followed by the requirements for the second test.
‘Ordinarily Resident’ Test
The first test is the common law concept and applies if it has been established that a natural person is ‘ordinarily resident in SA’ and the answer is positive. If the answer is negative, a second test takes place, based on a ‘physical presence’ test.
An individual will be considered to be ordinarily resident in SA, if SA is the country to which he/she will naturally and as a matter of course return to after his/her wanderings. It could be described as his/her usual or principal residence, or his/her real home.
Physical Presence Test
If an individual is not ordinarily resident in SA at any time during the year of assessment but he/she meets all three requirements of the physical presence test, he/she will be treated as being a tax resident in SA. This test usually applies to non-residents who live in SA.
To meet the requirements of the physical presence test, an individual must be physically present in SA for a period or periods exceeding –
- 91 days in total during the year of assessment under consideration, as well as;
- 91 days in total during each of the five years of assessment preceding the year of assessment under consideration; and
- 915 days in total during those five preceding years of assessment.
If an individual meets all the requirements referred to above, he/she will be a resident in SA for tax purposes, for the tax year under consideration.
Income from employment (or remuneration) may consist of salary, leave pay, wage, overtime pay, bonus, gratuity, commission, fee, emolument, pension, superannuation allowance, retiring allowance or stipend, whether in cash or otherwise and whether or not for services rendered.
The following items are specifically included as part of an employee’s remuneration:
- Annuities;
- Restraint of trade payments;
- Payment for services rendered, including a voluntary award;
- Compensation for loss of office;
- Lump-sum benefits from retirement funds;
- Transfers from State retirement funds;
- Commutation of amounts due;
- Fringe benefits;
- Allowances or advances;
- Allowances to public officers;
- Travelling allowances;
- Broad-based employee share plans;
- Vesting of equity instruments;
- Fund surpluses; and
- Dividends.
Stock options:
In SA, the employee is taxed on the gain they make when they are legally entitled to exercise the stock options or when the shares vest. The gain is included in income and the loss must be deducted from income.
The gain or loss is calculated by taking the market value of the shares at vesting date and deduct the cost of the share options (i.e., what the employee paid for the shares).
The employer must apply for a tax directive from SARS to find out how much tax to withhold on the options exercised. The tax directive will indicate how much tax (PAYE) the employer needs to withhold.
The employee will be required to declare and pay capital gains tax (CGT) when they actually sell the shares after the vesting date.
Broad-Based Employee Share Plan:
A ‘broad-based employee share plan’ is a plan in terms of which the equity shares in that employer are acquired by employees for a consideration not exceeding their par value. At least 80% of all employees who are eligible (employed permanently) are entitled to participate, have full voting rights and entitled to all dividends and foreign dividends on those shares.
In SA, a gain made from the disposal of any qualifying equity share or any right or interest in that share is taxed in the employee’s hands as income, if it is disposed of within 5 years from the date of grant.
If it is disposed of after 5 years from the date of grant, the gain will be subject to capital gains tax (CGT).
A ‘qualifying equity share’ is a share which is acquired by a person in terms of a broad-based employee share plan where the market value of all equity shares so acquired by that person does not in aggregate exceed R50 000 in value in the current tax year and the four immediately preceding tax years.
The source of remuneration usually relates to the rendering of services, and it is generally the location where the individual rendered those services.
The courts have held as follows in determining the source of income from employment:
- That it may be accepted that, prima facie, the test for the source of a payment for services rendered is the place where those services are rendered.
- That the salary of an employee who is stationed outside the Republic to render services there on behalf of an SA employer is from a source outside the Republic, even if the contract of employment was concluded or the salary was payable in SA.
Employment income earned by a non-resident for services rendered in SA is subject to the withholding of employees’ tax (also known as PAYE), if paid by a resident employer or a foreign employer who has a branch or permanent establishment (PE) in SA, PE is discussed below.
Employees of foreign employers, working in South Africa, may create a Permanent Establishment (“PE”) risk for such employers, in South Africa. This would result in possible corporate tax or employees’ tax obligations and should be carefully monitored on a regular basis. An analysis of the specific facts would need to be conducted to ascertain any potential risks.
Employees are subject to normal tax in SA on any taxable fringe benefits that are granted by their employer.
An employer is obliged to withhold employees’ tax, Skills Development Levy (SDL) and Unemployment Insurance Fund (UIF) contributions from the taxable value of the fringe benefits granted to the employees.
The foreign employment income exemption is an exemption provided on income earned from employment services rendered outside SA, meaning that this income will not be subject to normal tax in SA.
The exemption is only applicable to an SA tax resident who is an employee and renders services outside SA on behalf of an employer (SA or foreign) for a period exceeding 183 full days (6 months) and a continuous period exceeding 60 full days (2 months) outside SA during the period of 12 months. The exemption is limited to a maximum income of R1.25 million per tax year, this means that income in excess of the R1.25 million will be subject to normal tax in SA, whether or not foreign taxes were paid on that income.
SA has double tax agreements with a number of countries. A double taxation treaty relief may be available between SA and home country, only if the individual is present in SA for less than 183 days in any 12-month period, and his or her remuneration is paid and borne by an offshore entity (i.e., a non-SA).
Where the above requirements are all met, the remuneration will be exempt from tax in SA and subject to tax in home country. It is important, however, that each country’s double tax agreement is examined to ensure that the treaty relief is applicable.
Where an individual has paid foreign taxes on his or her foreign income, they may be allowed to claim foreign tax credits from their SA normal tax liability on assessment. This double tax relief is only available to SA resident taxpayers.
The credit is limited to the foreign tax payable and may not exceed the SA total normal tax payable calculated by applying the ratio of the total taxable income attributable to the foreign tax to the total taxable income.
Individuals are allowed to claim certain expenses incurred during the tax year against the income received. However, the type of expenses a person can claim is dependent on the type of income they received.
Salary earners who receive certain allowances (for example a travel or car allowance or a taxable subsistence allowance) can claim against the allowance.
Individuals can also claim contributions to approved pension, provident and retirement funds limited to R350 000 as well as donations made to approved public benefit organisations, limits apply.
Home office expenses if employment duties are mainly performed in a home office or if more than 50% of remuneration consists of commission or variable payments based on work performance. Other expenses which commission earners can claim include any service fees such as accounting, legal, administration, and sales and marketing fees paid to service providers.
Property owners who earn rental income from a property can claim certain expenses relating to the property. Individuals involved in a trade (a sole proprietor, partnership or a farmer, etc.) can claim certain expenses relating to the production of that income.
A Medical Scheme Fees Tax Credit (also known as an “MTC”) is a rebate which which is used to reduce the normal tax payable by individual persons (who pays medical aid contributions) on assessment. This credit is non-refundable, should it exceed the normal tax payable.
For the 2024, R364 per month, per member is claimable for the individual who is the main member of the medical aid and the first dependent. R246 per month, per member is claimable for any additional member. The credit is not applicable to a medical insurance.
The employees’ tax withholding regime (known as PAYE or Pay-As-You-Earn) is in essence a withholding tax system, which places the obligation upon the employer or representative employer to withhold employees’ tax via the payroll and to pay this over to SARS, on a monthly basis.
Companies are required to withhold PAYE from any amounts paid to non-resident independent contractors.
SARS prescribes that part time and seasonal workers who work less than 22 hours a week must be taxed at 25%. However, if they can prove to their employer that they don’t work for anybody else, or should they start to work more than 22 hours per week, then tax should be deducted per the normal tax tables as if they were in full time employment.
The payment to SARS must be made by the 7th of each month following the month in which the amount of tax was deducted from the employee. For an example the amount of employee’s tax deducted in the month of February should be paid over to SARS by the 7th of March.
SA does not operate a social security payment system as such, however, there is a compulsory levy for the purposes of funding education and training called Skills Development Levy (SDL). The amount payable is 1% of the leviable amount (taxable income) and it is due by registered employers.
There is another compulsory contribution to fund unemployment benefits called Unemployment Insurance Fund (UIF). The employer and employee are liable for the contribution of 1% each.
Both levies, together with employees’ tax are payable to SARS by the 7th of each month following the month in which the amount was deducted.
Capital gains tax (CGT) is not a separate tax but forms part of income tax. A capital gain arises when a taxpayer disposes of an asset on or after 1 October 2001 for proceeds that exceed its base cost.
A non-resident is liable for CGT only on immovable property located in SA or assets of a 'permanent establishment' (branch) in SA. Certain indirect interests in immovable property such as shares in a property company are deemed to be immovable property.
Individual taxpayers are granted with an annual exclusion of R40 000 from their total capital gain or capital loss. The total capital gain is taxed at a lower rate than normal income – because only a portion of the capital gain (currently 40%) is included in taxable income, and not the full gain.
A purchaser of immovable property (which has been disposed of in excess of R2 million) is obliged to withhold 7.5% from the purchase price payable and pay the tax to SARS, if the seller of the property is a natural person who is not resident in SA. The amount withheld by the buyer serves as an advance payment towards the seller’s final income tax liability.
A non-resident seller of immovable property may be entitled to request that tax be withheld at a lower or even zero rate, depending on the facts of each case.
The payment of the withholding tax needs to be made to SARS within 21 business days from date of Transfer.
Provisional tax is not a separate tax. Provisional tax payments are advance payments against a taxpayer’s estimated final tax liability for the year. These payments are usually payable if a foreign employee earns taxable income that is not subject to employee’s tax, for example, rental or interest income, or if employee is not paying PAYE. On assessment the provisional payments will be off set against the liability for normal tax for the applicable year of assessment.
Two provisional tax returns and payments are required:
- The first provisional tax return and payment, due on or before the last day of August each year.
- The second provisional tax return and payment, due on or before the last day of February of the following year.
A third payment is optional, this must be done after the end of the tax year, but before the issuing of the assessment by SARS.
Resident independent contractors will be required to file provisional tax returns, as no PAYE is withheld from amounts paid to them.
Securities transfer tax (STT) is levied for every transfer of any security issued by a close corporation or company incorporated, established or formed inside South Africa; or a company incorporated, established or formed outside South Africa and listed on an exchange. STT is also levied on any reallocation of securities from a member’s bank restricted stock account or a member’s unrestricted and security restricted stock account to a member’s general restricted stock account.
STT is levied at the rate of 0,25%. Either the member or the participant or the person to whom the security is transferred is liable for the tax.
Listed securities: STT must be paid by the 14th day of the month following the month during which transfers of listed securities occurred.
Unlisted securities: STT must be paid within two months from the end of the month in which the transfer of the unlisted security took place.
Transfer Duty is a tax levied on the value of any property acquired by any person by way of a transaction or in any other way.
The person acquiring the property and the person in whose favour or for whose benefit, any interest in or restriction upon the use or disposal of property has been renounced are responsible for paying the transfer duty.
Duty is payable within six (6) months from the date of acquisition.
Estate Duty is levied on the estate of the deceased person. Estate duty applies to the worldwide property and deemed property of a natural person who was ordinarily resident in SA and on SA property of non-residents persons.
The Estate Duty is levied on the dutiable value of an estate at a rate of 20% on the first R30 million and at a rate of 25% on the dutiable value of the estate above R30 million.
Estate Duty is due within 1 year of date of death or 30 days from date of assessment if assessment is issued within 1 year of date of death.
Dividends Tax is a tax on shareholders (beneficial owners) when dividends are paid to them, and it is withheld from their dividend payment by a withholding agent. A withholding agent can either be the company paying the dividend or a regulated intermediary.
The rate of Dividends Tax is 20% of the dividend paid.
Dividends tax withheld should be paid to SARS on or before the last day of the month following the month in which the dividend was paid.
The withholding tax on interest (WTI) is a tax charged on interest paid by any person to or for the benefit of a foreign person from a source within SA The foreign person is responsible for the tax, but it must be withheld by the person making the interest payment to or for the benefit of the foreign person.
Interest paid is taxed at a final withholding tax rate of 15%.
Withholding tax on interest should be paid to SARS on or before the last day of the month following the month in which the interest was paid.
The withholding tax on royalties (WTR) is due on any amount of royalty paid to or for the benefit of a foreign person from a source within SA. The foreign person is liable for the tax, but the tax must be withheld from the royalty payment by the person paying it to the foreign person (i.e. the withholding agent).
A royalty is any amount that is received or accrues in respect of:
- The use, right of use or permission to use any intellectual property,
- Imparting or undertaking to impart any scientific, technical, industrial or commercial knowledge or information, or
- Rendering of or the undertaking to render any assistance or service in connection with the application or utilisation of that knowledge or information.
Royalties paid is taxed at a final withholding tax rate of 15%.
Withholding tax on royalties should be paid to SARS on or before the last day of the month following the month in which the royalties were paid.
- There are a number of tax planning opportunities that may assist expatriates and their employers in reducing the taxes payable in SA.
- This begins with conducting an arrival tax briefing meeting to guide and assist the secondee in understanding his/her tax obligations in SA.
- Avoiding instances where an employee may create a permanent establishment in SA, resulting to tax obligations in SA for employer.
- Taking advantage of accommodation exemption for non-resident inbound expatriates.
- Planning the timing and duration of assignments and taking advance of the double tax treaty relief provided under the tax treaties between SA and home country.
- Provision of allowances from which business expenditure can be claimed against such allowances.
- Taking advantage of the allowable deductions, i.e., contributions to approved pension, provident, and retirement annuities.
- Joining and contributing to a medical aid scheme in order to take advantage of the medical scheme fees tax credit.
For further information on expatriate tax services in South Africa please contact: |
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Nokukhanya Madilonga |
Tax at SNG GT |