By Megan Landers, Senior Manager, AJM
Despite the initial hype, the Department of Home Affairs has allegedly issued only 24 remote work visas. The Department of Home Affairs introduced this initiative to boost South Africa’s economy by attracting individuals employed by foreign entities to live and work remotely in South Africa for up to three years, thereby contributing to the economy and increasing VAT revenues. This initiative further aims to boost local businesses, real estate and tourism. The rise in demand for coworking spaces, cafes and services for digital nomads leads to growth in jobs for locals, further contributing to income tax revenues.
What are the requirements for a Remote Work Visa:
- Remote employment: A foreign national must be employed by a foreign company or be self-employed with international clients. A holder of a remote work visa is not entitled to take up employment in South Africa.
- Sufficient financial means: a foreigner must provide proof that they earn a minimum gross annual income of ZAR 650,976
- Accommodation: a foreigner must provide proof of their intended accommodation in South Africa
- Tax registration: A holder of a remote work visa who is a tax resident in a country with a double tax agreement with South Africa is required to register with the South African Revenue Service (“SARS”) if they are in South Africa for longer than an aggregate of 183 days during any 12-month period. A holder of the visa is also required to register with SARS if they are tax residents in a country that does not have a double tax agreement with South Africa.
Why is Tax Registration required?
South Africa follows a residence-based tax system, meaning that South African tax residents are taxed on their worldwide income. In contrast, non-residents (such as those holding remote work visas) are taxed on South African-sourced income within the country.
While South African tax legislation identifies when specific income streams will be deemed to be from a South African source, it does not have specific provisions relating to employment services. The source of employment income is therefore determined in terms of common law principles.
A tax perspective on where income is “sourced”:
In terms of South African common law, the leading judgment in CIR v Lever Bros & Unilever Ltd [1946] 14 SATC 1 most appropriately sets out the approach to determine the source of income in the absence of a statutory provision providing a contrary position:
… (the source of the income) is not the quarter whence they come, but the originating cause of their being received as income and that this originating cause is the work which the taxpayer does to earn them, the quid pro quo which he gives in return for which he receives them.
In other words, the source of income will be where the originating cause of that income is. The determination of the place of the source is two-fold: firstly, identify the originating cause of the income and secondly, determine where that originating cause is located. Simply put, the source of income will generally be where the employee physically performs the work, rather than the commonly held misconception that it is where the employer is located. The common law test can similarly be applied to determine the source of a remote work visa holder who is self-employed. The source of the self-employed remote work visa holder’s income will generally be where they physically perform the work. Accordingly, the income earned by remote work visa holders while working remotely from South Africa will generally be subject to South African income tax.
What about double taxation?
However, as a means to mitigate potential double taxation, most of the South African double tax agreements generally exempt employment income if all of the following conditions are met:
- The employee is present in South Africa for less than 183 days in any 12 month period;
- The employee’s remuneration is paid by, or on behalf of, a non-resident employer; and
- The employee’s remuneration is not borne by a permanent establishment of the employer in South Africa.
Remote work visa holders who do not meet all these conditions, or who are from countries that do not have double tax agreements with South Africa, will be subject to South African income tax on their South African-sourced income. These remote worker visa holders are required to register for provisional tax and make bi-annual tax payments in August and February. Unfortunately, this creates a significant risk of double taxation for remote work visa holders if their country of tax residence taxes them on their worldwide income and does not provide relief against foreign taxes.
Tax compliance obligations
Interestingly, from the 2025 tax year, SARS has introduced provisional tax returns and annual tax returns specifically tailored to the taxpayer’s registration status available with SARS. Non-residents will be presented with a non-resident provisional tax return (IRP6) and the non-resident wizard questionnaire when completing the annual tax return (ITR12). Residents (those who are registered for provisional tax) will receive provisional tax returns tailored for residents and the resident wizard questionnaire when completing their annual tax returns.
Remote work visa holders may face penalties if they fail to comply with these tax compliance obligations.
A remote work visa holder’s presence in South Africa can trigger tax and obligations for their foreign employer if their activities create a permanent establishment (“PE”) in South Africa. Under paragraph 2(1) of the Fourth Schedule to the Income Tax Act, No. 58 of 1962, a foreign employer is required to withhold Pay-As-You-Earn (“PAYE”) from an employee’s remuneration paid by the foreign employer to an employee working in South Africa. If a PE does not exist, the foreign employer is generally not required to withhold PAYE; however, the remote work visa holder may still be required to register for provisional tax, as mentioned above.
Other social security obligations for the foreign employer may include contributions to the Unemployment Insurance Fund (“UIF”) and the Skills Development Levy (“SDL”). Foreign employers are required to register with the UIF and contribute towards the fund if they employ a remote work visa holder working in South Africa for more than 24 hours per month. The monthly contribution for UIF is 2% of the employee’s gross monthly salary. The employer is required to deduct 1% of the employee’s gross salary per month, and the employer contributes 1%. SDL applies once the employer’s total remuneration exceeds R500,000 per year. The minimum gross income requirement for a remote work visa exceeds the R500,000 per year threshold, and therefore, SDL will apply.
Final thoughts: Don’t be deterred
The tax considerations I have highlighted above should not deter you, as a remote worker or nomad, from seizing the opportunity to explore South Africa, with its affordable living costs, diverse culture, and scenic beauty. Moreover, it should not deter a foreign employer from sourcing global talent currently located in South Africa. Let’s connect and navigate these tax considerations together.