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How will my tax work when I work in SA for a foreign based company?

Posted 20 November 2013 under Tax Questions



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I will be working for a UK based company from my home in SA. It is a very small business my sister has opened. I will be receiving foreign currency in either dollars or euros. I will earn a monthly salary. Will I pay normal tax? Will I pay tax in UK before I get my salary? How will this work for me? How will I get an IRP5? I wont be getting R250k per year but I am already a registered tax payer with the company I currently work for. I registered and submit returns every year even though I dont earn R250k, for claiming against medical aid.

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TaxTimTaxTim says:
20 November 2013 at 22:36

How will your sister pay you, in RANDS or in another country, do they have an office in SA or are you the only one working here?


Annie says:
21 November 2013 at 5:58

Thanks for the reply. It will be a new small business. Just her and another lady working from the UK. No offices in SA but I will be working from home in SA. I will be paid in US dollars or Euros. Not sure yet exact which one. Will have to confirm.


TaxTimTaxTim says:
21 November 2013 at 7:43

You should invoice them each month and you will then complete your return in SA using the income generated which you will need to convert to RANDS, unless they pay you in your SA account which then covers the conversion. You will be able to deduct your expenses that are incurred for work purposes in order to reduce your taxable amount.


Annie says:
21 November 2013 at 7:59

Thanks Tim. Does invoicing them not then mean I am being paid for services rendered and not as an employee of her company? I assume that would make me a contractor?


Annie says:
21 November 2013 at 8:00

Sorry. Also meant to ask, would I then pay provisional tax? Instead of a monthly amount?


TaxTimTaxTim says:
21 November 2013 at 8:30

Yes you would have to pay provisional tax, otherwise the company will have to register as a employer in South Africa and you are an employee of theirs here in SA. In this way you can then have them deduct monthly PAYE.


Annie says:
21 November 2013 at 8:52

I read somewhere that provisional tax is not refundable. I currently pay medical aid for my whole family and get a nice refund when tax season opens. Will I now not be able to do this?


TaxTimTaxTim says:
21 November 2013 at 8:55

Provisional tax is just tax up front, similar to PAYE, but collected every 6 months. The overall tax paid, if exceeding your tax owing will always be refundable.


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