Tax Focus

Employees’ Tax Registration Requirements for Non-resident Employers in South Africa

By:
Nokukhanya Madilonga,
Laurence Mbokwane
29 Jan 20241 min read
The proposed change in the Income Tax Act aims to treat all employers the same. This means that whether an employer is local or from another country, they will be required to deduct employees' tax (PAYE), if the change is approved.
In this article

Duties of Non-Resident Employers

Currently, non-resident companies employing local South African employees are under no obligation to withhold employees' tax unless remuneration is paid or is liable to be paid by a resident representative employer. This means that the employee is responsible for paying their taxes by way of the provisional tax system.

Concerns About Administrative Burden

However, some members of the public have expressed concerns that the proposed changes will place an administrative burden on non-resident employers. The National Treasury has responded to these concerns by proposing that the obligation to register as an employer will only apply to non-resident employers that have a permanent establishment in South Africa.

Relief for Non-Resident Employers

This will limit the obligation to non-resident employers that have business activities in South Africa, thus relieving those with no business activity or presence in the country from withholding employees' tax. It is crucial to conduct a specific factual analysis to determine whether there are any potential risks of creating a permanent establishment in South Africa.

Get in Touch

If you need any assistance with employer tax obligations in South Africa, our team is here to help. Don't hesitate to contact us at tax.info@sng.gt.com.

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