Do foreigners pay tax in South Africa?

Many people don’t like to concern themselves with the issue of tax. It can be a very complicated process that takes a lot of time and, of course, money. If you’re a foreigner planning to move or work in South Africa, it is wise to consult the professionals and find out which tax rules apply to you. Read about the various factors that obligate foreigners to pay income tax in South Africa:

PAYE

Any foreigner working in the country for a South African company or working outside the country for a South African company, is liable to be taxed for PAYE (Pay-As-You-Earn). This tax will be taken from the individual’s salary at the end of each month by the employer, in the case of a foreigner working inside the country, or by an authorised agent, in the case of a foreigner working outside the country.

Taxable income

The foreigner may also be subject to income tax, depending on his tax liability. A foreigner’s tax liability can be calculated by applying the tax rate to their taxable income. The taxable income can be worked out according to salary, deductions, exempt income, capital gains and more. If they do not earn above the threshold for gross income – annual taxable income – they will not be liable for income tax.

Provisional Tax

If the foreigner is subject to tax in South Africa, but is being remunerated by a foreign employer, they may be liable for provisional tax. This is not a separate form of tax, rather a way to assist taxpayers by allowing them to pay their tax in small amounts throughout the year, rather than in a lumpsum. Individuals earning a farming or business income are also liable to pay provisional tax.