Taxes are mandatory contributions levied on individuals or corporations by a government entity—whether local, regional, or national. Tax revenues finance government activities, including public works and services such as roads, housing and schools.
In economics, taxes fall on whoever pays the burden of the tax, whether this is the entity being taxed, such as a business, or the end consumers of the business’s goods. From an accounting perspective, there are various taxes to consider, including payroll taxes, federal and state income taxes, and sales taxes.
South Africa has several types of taxes that individuals and businesses may be required to pay. Keep in mind that tax laws and regulations may change over time, so it’s advisable to consult with a tax professional or check official government sources for the most up-to-date information. Here are the main types of taxes in South Africa:
This is a tax on the income earned by individuals, companies, and trusts. It is the largest source of government revenue in South Africa.
- Individuals: Tax is levied on income earned by individuals, including employment income, rental income, business income, and other forms of income. There are different tax brackets with progressively higher rates for higher income levels.
- Companies: Companies in South Africa are taxed on their worldwide income. The tax rate varies depending on the type of company and its level of income.
Pay As You Earn
Employees’ Tax refers to the tax required to be deducted by an employer from an employee’s remuneration paid or payable
Value Added Tax (VAT)
VAT is a consumption tax that is levied on the sale of goods and services. It is collected at each stage of the production and distribution process.
Capital Gains Tax (CGT)
This tax is levied on the profit made from the sale of certain assets, such as real estate, shares, and other investments.
This is a tax on the dividends paid by companies to their shareholders. It is withheld by the company before the dividend is paid.
This is a tax on the estate of a deceased person. It is levied on the total value of the estate and is paid by the estate before distribution to beneficiaries.
This is a tax imposed on the transfer of immovable property (real estate), such as land and buildings.
This is a tax on the value of property donated by one person to another. It is paid by the donor.
Customs and Excise Duties
These are taxes imposed on imported and exported goods.
Skills Development Levy
This is a levy paid by employers to fund skills development in the country. It is calculated as a percentage of the total salaries paid by the employer.
Unemployment Insurance Fund (UIF)
This is a compulsory fund that provides short-term relief to workers when they become unemployed or are unable to work due to illness.
This is a tax on fuel, which is intended to fund road construction and maintenance.
Remember, tax laws can be complex, and it’s important to seek advice from a qualified tax professional or consult official government sources for the most accurate and up-to-date information regarding taxes.