2024-05-14-KPMG_Global-South_Africa_–_Update_for_Non-resident_Employers_with_a_PE_in_South_Africa_4页_279kb

GMS Flash Alert Summary: South Africa - Tax Withholding Obligations for Non-Resident Employers

Alert Update:

• This is a follow-up to KPMG's GMS Flash Alert 2023-218, clarifying legislative changes effective as of December 22, 2023.
• The original proposal, released in July 2023, was brought forward unexpectedly and took effect immediately.

Key Requirements:

• Foreign employers must register as "employers" with the South African Revenue Service (SARS) if they:
  • Conduct business through a permanent establishment (PE) in South Africa; or
  • Have a representative employer in South Africa.
• Compliance involves withholding employees' tax and remitting it monthly to SARS.

Implications:

• Challenges: Added complexity to payroll management; non-compliance risks penalties, legal issues, and damage to reputation.
• Opportunities: Demonstrates compliance and good corporate citizenship, building trust and enhancing the employer's reputation.

Actions for Employers:

• Seek professional tax advice to assess:
  • Existence of a PE or representative employer.
  • Applicable tax rates, thresholds, and reporting obligations.
  • Consequences of non-compliance.
• Consider the Voluntary Disclosure Programme (VDP) to mitigate penalties if out of compliance.
• Refer to the original GMS Flash Alert for further details.

Additional Notes:

• A misalignment remains with Unemployment Insurance Fund (UIF) contributions and Skills Development Levies (SDL), affecting those without a PE or representative employer.
• All foreign employers must comply with UIF and SDL obligations for remuneration paid to South African employees.
• Further submissions to SARS and guidance from tax practitioners may continue to address this anomaly.

Recommendation:

• Foreign employers should consult with tax professionals or KPMG in South Africa to ensure compliance and address specific queries.