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South Africa Personal Taxation
BACKGROUND

South Africa operates under a residency-based system of taxation.
In essence this means if one is viewed as resident for tax purposes, you are liable to taxation on your worldwide income. It does however have in place a dual taxation agreement with most European countries, specifically to ensure fair and equitable treatment of an individual.

Your positions inside South Africa are to be one of a financer, shareholder and employee.
Each of these positions can carry with it different tax implications:

Financer – in this capacity you are lending money to the Closed corporation, in terms of the actual loan
there are no tax repercussions, however the charging of interest is liable to income tax.

Shareholder – profits that are distributed via dividends are taxable within the Private Company
(normal company tax 29%, secondary tax on dividends)

Employee – should the Pty be employing you, it will have to register you for SITE or PAYE depending
upon your remuneration package.

There is an overriding factor in residency-based taxation and that is the source of the income.
If the source is from an employer based within South Africa it is liable to taxation.

As with most countries, SARS dictates a level where one must register for income tax, currently R60 000 per annum.

Employers are obliged to register for SITE or PAYE.


VALUE ADDED TAX (VAT)
  • In terms of VAT registration businesses are required to register for VAT where turnover of in excess of R300 000
    in a 12-month period is expected to be exceeded.
  • Where turnover is less than R300 000 but exceeds R20 000 (R60 000 in the case of commercial rental establishments) in a 12 month period the owner/s may volunteer to be VAT registered.
  • Where turnover is less than R1 000 000 in a 12 month period VAT returns can be completed every 4 months,
    if less than R30 000 000 then every two months.
Please get in touch with us for a consultation on taxation issues!

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