South Africa has a residence-based system, which in turn means residents are, subject to certain exclusions and taxed on their worldwide income irrespective of where their income was earned. You can calculate income tax deductions on salary using our free online tax calculator
Non-residents are, however, taxed on their income from a South African source. Foreign taxes are offset against South African tax payable on foreign income.
The majority of the state's income is derived from income tax, both personal and company tax, although nearly a third of total revenue from national government taxes comes from indirect taxes such as VAT.
There is a register of taxpayers and it’s simply the number of active and inactive taxpayers in South Africa. At SARS (South African Revenue Service) the aim is to grow the register and to reduce the tax gap. The level of growth is influenced by the following economic conditions,
The registers comprises of individuals, companies, trusts, employers and VAT vendors.
Registered taxpayers must request income tax returns every year. The year of assessment for individuals covers 12 months, beginning on the 1st March and ending on the final day of February the following year. Companies are permitted to have a tax year ending on a date that coincides with their financial year. The Act also provides for certain classes of taxpayers to have a year of assessment ending on a day other than the last day of February.
Tax returns must be submitted to SARS on the date given. Individuals and trusts are required to submit their income tax returns on or before the date published annually in the government gazette. Companies are required to submit an income tax return within 12 months from the date of their financial year-end.
People whose income comes from sources other than a wage such as a trade, profession or investments and companies are required submit two provisional tax returns and where applicable to make two provisional tax payments during the course of the tax year and may opt for a third "topping-up" payment six months after the end of the tax year.
Failure to pay taxes on time will result on interest charges been issued based on the amount and the time lapsed.
SARS administers a number of tax Acts, in terms of which money (taxes, duties and levies) is collected and paid into the National Revenue Fund. SARS also collects money on behalf of other departments under their legislation, which is then also paid into the National Revenue Fund.
Income tax is the government's main source of income and is levied in terms of the Income Tax Act, 1962.
Income tax is levied on residents' worldwide income, with appropriate relief to avoid double taxation. Non-residents are taxed on their income from a South African source. Tax is levied on taxable income that, in essence, consists of gross income less exemptions and allowable deductions as per the Act.
In respect of the 2016-year of assessment, companies are taxed at a rate of 28%.
Small business corporations i.e. those with gross income of less than R20 million for years of assessment from 1 April 2013 onwards and less than R14 million for years of assessments prior to 1 April 2013, benefit from a graduated tax rate on their taxable income.
Small business corporations have the ability to write off certain investment expenditure in the year in which it is incurred.
Capital Gains Tax (CGT) was introduced in October 2001. It forms part of the income tax system and includes in taxable income from capital gains made on the disposal of assets.
Value-added tax (VAT) is levied at a standard rate of 14% on all goods and services subject to certain exemptions, exceptions, deductions and adjustments provided for in the Value Added Tax Act, 1991.
VAT is the government's second biggest source of income and is levied on the supply of all goods and services rendered by registered vendors throughout the business cycle.
VAT is also levied on the importation of certain goods and services into South Africa. It is levied at the standard rate of 14%, but provision for exemptions and zero-rating of certain goods or services exists.
Ordinary Customs Duty is levied on imported goods classifiable in Schedule No. 1 to the Customs and Excise Act, 1964. South Africa is a member of the World Customs Organisation (WCO) and therefore, uses the Harmonized Commodity Description and Coding System (HS) for the classification of goods on importation.
Goods can be imported free of duty where the rate of duty is indicated ‘Free’. Other types of rates include:
Excise duty is levied on certain locally manufactured goods as well as on their imported equivalents. This duty is levied as a specific duty on tobacco and liquor, and as an Ad Valorem Duty (e.g. %) on products such as cosmetics, televisions, audio equipment and motor vehicles.
Transfer Duty is payable when property is acquired at progressive marginal rates. All transactions relating to a taxable supply of goods that are subject to VAT are exempt from transfer duty.
For the purposes of Estate Duty, an estate consists of all property of the deceased, including deemed property, such as life insurance policies and certain payments from retirement funds wherever situated.
The estate of a deceased non-resident consists only of his or her South African assets. The duty, at a rate of 20%, is calculated on the dutiable amount of the estate. Certain admissible deductions from the total value of the estate are allowed.
The Stamp Duties Act, 1968, has been repealed with effect from 1 April 2009. No stamp duty is liable on leases of fixed property executed on or after that date. If a lease agreement was executed before 1 April 2009, stamp duty is still levied on leases of fixed property.
Uncertified Securities tax was payable where any securities, transferable without a written instrument and not evidenced by a certificate, were transferred to another beneficiary prior to 1 July 2008. It used to be charged at a rate of 0,25%.
The Securities Transfer Tax Act, 2007, has replaced the Uncertificated Securities Tax Act, 1998 and provisions are applicable in respect of every transfer of any security on or after 1 July 2008.
SARS collects the Skills Development Levy on behalf of the department of higher education and training. This levy is compulsory in terms of the Skills Development Levies Act, 1998, for the purpose of funding of education and training. The SDL rate is 1% of a payroll and is payable by employers who are registered with SARS for employees’ tax purposes, or employers who have an annual payroll in excess of R500 000.
The Unemployment Insurance Fund (UIF) provides short-term relief to workers should they become unemployed or are unable to work because of maternity, adoption leave or illness. It also provides relief to the dependants of the deceased contributor in terms of the Unemployment Insurance Contributions Act, 2002.
The bulk of contributions to UIF is collected by SARS and transferred to the fund, which is administered by the Unemployment Insurance commissioner.
The APT rates for passengers departing on international flights are currently R190 and for passengers flying to Botswana, Lesotho, Namibia and Swaziland a lower rate are charged.
Donations Tax is tax payable on the total value of property disposed of by a South African resident by means of a donation.