While no one enjoys being taxed, ignorance of your tax obligations is not a valid excuse to not pay taxes. If you are non-compliant, SARS will still pursue fines, asset forfeiture, and even criminal charges if you fail to pay taxes, whether you were aware you should be paying or not. For that reason, you should know what taxes you may need to pay, as that can be the first step to help you determine how much you should pay in tax.
List of 17 Crucial Taxes and Levies
The South African Revenue Services has promised to crack down on non-compliance. For the average non-compliant South African, failing to pay taxes isn’t part of a deliberate scheme to prevent SARS from collecting their fair share but rather a lack of knowledge. This list of 17 taxes will introduce you to the taxes you may need to pay.
Seven Crucial Taxes For Businesses
Not every tax on this list will apply to your business, but they give you an idea of what to expect to pay if you are running a company that does business in South Africa.
Air Passenger Tax
International passenger carrier operators, registered agents, or charters are responsible for paying air passenger tax for passengers on international flights. Cargo airlines will also need to register for Air Passenger tax but do not need to pay this tax.
Corporate Income Tax
Companies incorporated in South Africa or international businesses with branches in South Africa are subject to corporate income tax, which is charged at 28% of income. Small businesses with a gross income of less than R550 000 a year may pay less in CIT.
Manufacturers of high-volume, daily consumable products and certain non-essential items are subject to excise duty. Each product manufactured will be levied separately by SACU member states.
Mineral and Petroleum Royalties
Although this tax can be paid by individuals, it’s primarily companies that are subject to it. If you hold a prospecting, exploration, mining right or retention or mining permit, a lease, or sublease in respect of such a right, you will be subject to MPR.
Currently, the royalty ranges between 0.5% to 7% depending on the resource.
Pay As You Earn (PAYE)
The most crucial tax for South African businesses is PAYE. PAYE must be paid on all tax-qualified employees within seven days after the month when PAYE was deducted. The amount levied will depend on the employee’s tax bracket.
Skills Development Levy (SDL)
In an effort to encourage businesses to contribute to learning in South Africa, the revenue service introduced the Skills Development Levy. If your business pays –– or expects to pay –– more than R500 000 in salaries, you will be subject to the 1% levy for total salaries paid.
If you are registered for PAYE, you also need to be registered for UIF. The amount an employer will contribute is 2% (1% of which will be contributed by the employees’ salary) on any amount up to R17 712 per month or R 212 544 annually.
Ten General Taxes South Africans Pay
You may not need to pay every tax on this list, but if you reside or earn an income in South Africa, you will be subject to one or more of these taxes.
Value Added Tax (VAT) currently stands at 15% and includes most products and services in South Africa. However, there are zero-rated products and services. This includes fuel, public transport, rent, education services provided by an approved body, and 19 basic food items. If you live in or are visiting South Africa, VAT is unavoidable unless you only buy zero-rated products and only use zero-rated services.
Capital Gains Tax
Capital gains tax forms part of income tax and is levied on any profit from selling property or an investment. For non-residence, the tax only applies to immovable property.
As a shareholder of a company, when you receive dividends, you will be subject to dividends tax at a rate of 20%.
Donation Tax is payable only if you donate to non-exempt causes or give more than the exempt amount. If that is the case, the person donating (donor) is subject to pay the tax within six months of donating; otherwise, the responsibility falls to the recipient (donee). Currently, this tax is levied at 20% for amounts lower than R30 million and 25% for amounts more than R30 million.
If you are inheriting assets, you will be subject to estate duty of 20% of the dutiable value of the estate up to R30 million and 25% for assets amounting to more than R30 million. This figure includes international assets.
Whether you’re importing one item or one thousand items, you will be subject to Customs Duties on the imported items as a measure to protect the local market. Customs is determined by the value of the items, their origin, and tariff.
Income tax is the tax you pay for generating income. Beyond income from employment, income tax also covers rental income, profits from a business or trading, royalties, annuities, pension, capital gains, and directors fees, among others. However, you only need to pay income tax if your income exceeds a certain threshold.
In the 2022/2023 financial year, that threshold is R87 300 if you’re younger than 65 years old, R135 150 if you’re between 65 and 75 years old, and R151 100 if you’re older than 75.
Provisional tax is not separate from income tax. Instead, it’s a way to pay your income tax beforehand to avoid taxpayers acquiring a large debt.
However, not everyone needs to pay provisional tax, only those who receive income other than remuneration.
Securities Transfer Tax
If you have a share or depositary in a company or an interest in a close corporation, you may be subject to Securities Transfer tax. Currently, the rate levied is 0.25% and is paid by the member or participant who transferred the tax.
Those who are buying property including mineral rights and shares in a residential property company will need to pay transfer duty according to the purchase price of the property.
To learn more about how you can pay the taxes you may be subject to, you can visit the SARS website for a list of crucial taxes in South Africa and instructions on how and when to pay them.