South Africa to alter taxation laws for remote workers

Alex Omenye
Alex Omenye

A draft of the proposed tax administration bill, which will attempt to alter how remote employees pay taxes, has been shared by South African Revenue Services.

One of the suggested bills seeks to eliminate the distinction between remote and non-remote workers and to mandate pay-as-you-earn tax deductions by employers of remote employees based in South Africa.

At the moment, remote employees pay taxes by disclosing their earnings during tax season, which is typically from the start of July to the end of October each year.

The treasury argued that mandating PAYE tax would “level the playing field between resident and non-resident employers and ensuring alignment with skills development levies and unemployment insurance contributions.”

Foreign enterprises would need to apply for and receive a SARS income tax number, form a branch company in South Africa, and register for the Skills Development Levy and Unemployment Insurance Fund contributions in order to effectively withhold the PAYE tax of South African employees.

According to some labour and tax experts, these complicated requirements may deter foreign businesses from considering South African workers for remote employment prospects.

The final bill will be made available for parliament once the public comment period on the proposed revisions, which is presently accessible to the public, expires on August 31, 2023.

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