South Africa

Introduction

South Africa is a country on the southernmost tip of Africa. It borders Botswana, Mozambique, Namibia, Swaziland and Zimbabwe. With a population of over 59 million, it is the 24th most populous country in the world. The country is made up of countless diverse cultures and religions, and there are 11 official languages spoken there, including Afrikaans, Zulu and English.

South Africa has a fascinating history dating back to prehistoric times. Many of the world’s oldest archaeological and human fossil remains have been found in caves located in the Gauteng Province, which is now a UNESCO World Heritage site. The country is extremely beautiful with many important geographical regions and places of interest. There are also numerous famous landmarks and national parks in South Africa, including the Kruger National Park, Table Mountain, Robben Island museum and Cape Point.

South Africa was colonised Dutch settlers in 1652 and by Great Britain between 1795 and 1803. British emigration to South Africa began in 1818. After the discovery of diamonds in 1867 and gold in 1884, economic growth and immigration increased. 

Apartheid began in South Africa in 1948 after the nationalist government classified people into three races and developed many limitations for black people. Widespread violence led to government negotiations to end apartheid, and Nelson Mandela was released from prison after serving 27 years for sabotage.

Following his release from prison in 1990, Nelson Mandela was elected President of South Africa in 1994, and remained in power until 1999. The country is currently headed by Cyril Ramaphosa.

South Africa was the founding member of the UN and is one of the founding members of the African Union (AU). It has the second largest economy all of AU members after Nigeria, and the largest stock exchange in Africa.

The country has a mixed economy with a relatively high GDP, and is one of the world’s largest exporters of gold, platinum and other natural resources. Well-established sectors include communications, energy, finance, legal and transport, which is one of the many reasons why so many freelancers, contractors and self-employed professionals seek work in the country.

Registry/Registration

With its growing economy and thriving manufacturing sector, South Africa has many opportunities for skilled professionals in various positions. That being said, there is a vast skills shortage in South Africa, and the government is keen to attract highly skilled international professionals.

Critical skills needed are vast and varied, ranging from ICT specialists and engineers to technicians, scientists, risk managers, FinTech experts and foreign language speakers.

When it comes to working in South Africa as a self-employed professional or contractor, there are a number of different types of work visas available. These include:

  • The general Work Visa
  • Critical Skills Work Visa
  • Intra-Company Transfer Visa (ICT)
  • Business Visas

Once you have a work visa, you can then apply for a permanent residence permit in South Africa. This can be applied for at one of the following:

  • The South African embassy, consulate or diplomatic representative in your country of residence or citizenship
  • At a South African diplomatic representative in an adjoining or nearby foreign country if none is available in your country of residence
  • At your nearest Visa Facilitation Centre (VFS) in South Africa

Paperwork needed includes:

  • Passport
  • Proof of employment situation in South Africa
  • Vaccination or medical reports
  • Police clearance certificates
  • Proof of funds
  • Qualifications translated and evaluated by the South African Qualifications Authority (SAQA) if needed

Income Tax

The country offers countless opportunities for South Africa Contracting; however it’s essential that you comply with relevant tax requirements. If you qualify as self-employed or a freelancer in South Africa, then you will be taxed as an individual and will need to submit a personal income tax (ITR12) form.

South Africa’s income tax system is levied on residents’ worldwide income, while relief is applied to some foreigners to avoid double taxation.

You will be required to pay income tax in South Africa if:

  • You have a citizenship or residence permit
  • You have been living in South Africa for more than 91 days in total in each of the last five tax years
  • You have lived at least 915 days in South Africa in total across those five years

Income tax rates as of 2020 are as follows:

  • R195,850: 18% of taxable income
  • R195,851–R305,850: 26% (R35,253 plus 26% of taxable income above R195,850)
  • R305,851–R423,300: 31% (R63,853 plus 31% of taxable income above R305,850)
  • R423,301–R555,600: 36% (R100,263 plus 36% of taxable income above R423,300)
  • R555,601–R708,310: 39% (R147,891 plus 39% of taxable income above R555,600)
  • R708,311 – R1,500,000: 41% (R207,448 plus 41% of taxable income above R708,310)
  • R1,500,001+: 45% (R532,041 plus 45% of taxable income above R1,500,000)

 

Please contact Chesterfield to speak to one of our tax professionals.

 

Social Security

 

Certain categories of self-employed workers who work more than 24 hours a month must pay social security contributions. The social security rates are minimal as the country does not have a comprehensive social security system. Employers and employees must contribute to an unemployment insurance fund at a rate of 1% of gross remuneration. Contributions are limited to a remuneration of ZAR 178,464 per annum per individual.

Chesterfield deducts tax and social security on a PAYE basis, and payments are made to the relevant authorities on your behalf. Chesterfield will discuss your unique circumstances and assist you with minimising your tax and social security liabilities whilst ensuring you remain fully compliant with South African payroll and tax legislation.

Employment Rules

South African common law recognises the distinction between a contractor of service (involving an employer-employee relationship) and a contract for services (involving a principal-independent contractor relationship where the principal contracts the independent contractor to deliver specific services). There is also a distinction between indefinite contracts of employment and fixed-term contracts of employment.  

An independent contractor works subject to their specific South Africa contract, however he or she may also perform services through others. The time for performance by the independent contractor is usually specified, while the contract usually terminates on completion of the specified work.

Independent contractors are entitled to the benefits and terms that have been agreed upon between the independent contractor and his or her client. There are no specific limitations on the use of independent contractors, and they benefit from protection under the Promotion of Equality and Prevention of Unfair Discrimination Act.

Banks

Once you move to South Africa you will need to open a bank account. There is no shortage of banks in the country, especially in urban areas. The country’s biggest banks are Absa Bank, Capitec Bank, First National, Nedbank and Standard Bank.

The type of bank account you can open will depend on the type of visa you have been issued with. If you have a temporary or permanent residency visa, you can open a resident bank account. You can do this from your home country, though this will easier by visiting a branch.

To open a bank account you will some or all of the following:

  • A valid passport
  • Work permit
  • Proof of address
  • Solid evidence of banking history in your home country
  • The minimum required opening deposit
  • A certified copy of your passport (authenticated at your overseas branch)
  • Proof of income

Please be sure to read the terms and conditions of your account carefully in order to find information on fees and charges. Common charges in the country include ATM fees when using a different bank, as well as transaction charges.

Please contact Chesterfield and we will provide you with the best options that suit your individual circumstances.

Corporate Structures

Many independent contractors and freelance workers in South Africa use an umbrella company to act as their full-time employer. This enables them to maintain their independence as a contractor. Through Chesterfield’s umbrella solution, you will be sponsored and provided with a single work permit for multiple contracts in South Africa, whilst maintaining your own contracts, hours and schedules.

Chesterfield’s South Africa freelancer services and South Africa employed solutions are fully tailored to your unique needs. We work closely with each of our clients to provide an easy and convenient umbrella solution that gives you the flexibility of being self-employed with the benefits of being employed. Our comprehensive solutions also ensure you are fully compliant with the country’s tax and immigration laws, allowing you to focus on your work, reduce your tax liability and comply with all South African regulations.

Chesterfield & Contracting in South Africa

South Africa is a truly diverse and exciting place offering incredible working opportunities combined with a high quality of life, great climate and relatively low cost of living. There are so many new emerging and rapidly developing markets, all of which are facing talent shortages. This means that there are countless international contracting opportunities available, and demand for skilled professionals is very high.

 

Chesterfield offers expert advice and support to facilitate your transition to South Africa. We possess a wealth of knowledge and experience in contractor management solutions in South Africa. Please contact our team to discover how we can help you.