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Do independent contractors working for US company have to pay South African tax.

Posted 25 January 2016 under Tax Questions



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Mikey says:
18 January 2016 at 19:44

Awesome website you have, I currently reside in Cape Town and I am a South African resident, I recently quit my South African job in July 2015. I started working for a US company as an independent contractor as of 1 September 2015 until present. I also freelance on the side for a South African business, I work about 6-8 hours a day for the US company and on average 6 hours a week for the South African based business. I would like to know, what are the tax implications in my case for South Africa? Am I able to be exempted from SARS if I stay more than 183 days away from South African or neighboring countries soil? How would I specify my income for tax if each month I earn a different amount based on the hours worked?

I am confused and there is little information present on this.

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TaxTimTaxTim says:
25 January 2016 at 9:15

Thanks for the positive words on our website!

If I understand correctly you are working in South Africa not the USA. Therefore no exemptions will apply to you. You will have to pay tax on all your earnings collectively.

You would have to register as a Provisional Taxpayer and submit 2 extra tax returns per year along with your final tax return each year. You would be subject to normal tax similar to how you were as a salaried employee.

Do you intend to go work out of SA?


Mikey says:
25 January 2016 at 11:19

Thanks for specifying this, I've only been working for 5 months for this company after I quit my South African company. This was about July 2015 and it appeared they have handled my tax. Yes, I do intend travelling and working out of SA for a few months starting soon, (about 7 without being in SA to be exact), This is why I've asked about the exemption? Can you please specify this in detail for me since I have an intention of being abroad for long periods with no tax return to SA soil during this 7 - 8 month period per year.


TaxTimTaxTim says:
25 January 2016 at 15:25

So effectively if you are out SA for more than 183 days with 60 of those being continuous for work purposes and earning income then you will be exempt from tax on that income earned. These 183 days must be within any 12 month period.


Mikey says:
25 January 2016 at 15:28

Thanks Tim for all the help! Keep up the good work.


TaxTimTaxTim says:
25 January 2016 at 16:13

Only a pleasure!


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