South Africa - Tax Guide for Freelance Contractors

Residents and non-residents working in South Africa are required to pay social security contributions on their gross salary in South Africa or in the country of their employer if a social security agreement exists between the two countries and the employer obtains a detachment certificate.

In principle, South African employers withhold South African social security contributions on the remuneration of their employees working in South Africa. Contributions are paid to the Unemployment Insurance Fund (UIF) which covers benefits for unemployment, illness, maternity, adoption and for dependants of deceased persons.

The employer also has to make contributions to the Compensation Fund which provides benefits in case of disablement or death caused by occupational injuries or diseases.

The contributions depend on the annual earnings of their employees and the nature of activities.

Social security rates for 2011/2012:

 Employer

• 1% of employee’s salary as unemployment insurance contribution capped at ZAR 1’497.36 per year,
• 1% of employer’s payroll per month for the skills development levy.  Employers are exempt if the employer’s payroll has been less than ZAR 500,000 for the previous 12 months,
•  varying fee for workmen’s compensation.

• 1% of salary for unemployment insurance contributions capped at ZAR 1’497.36 per year.