If National Treasury has its way, foreign companies hiring South Africans as remote workers may soon find themselves in a legislative compliance pickle with SARS, which could see them become bogged down in red tape that negatively impacts their business operations.
According to Nicol Myburgh, head of CRS Employment Services (CROS), an affiliate of CRS Technologies, the government department is seeking to align the obligations for foreign employers with that of their South African counterparts.
“Currently, foreign employers do not have to deduct PAYE (pay as you earn) from the salaries of their South African employees, as this is paid by the employees themselves as provisional taxpayers,” he explains. “Foreign employers are, however, required to pay the one per cent skills development levy as well as employer contributions to the Unemployment Insurance Fund.
“South African employers, on the other hand, are required to register as an employer, and are accountable for PAYE deductions, as well as SDL and UIF contributions to SARS.”
To resolve this inconsistency, government is proposing that foreign employers be required to register as employers with SARS and that PAYE deductions be included among their payroll compliance obligations.
SARS employers are required to have a CIPC registration number, an income tax registration number and a South African bank account.
“Depending on the nature of the foreign business, and whether its South African workforce consists of full-time employees or independent contractors, meeting these requirements can become an administrative and bureaucratic nightmare.”
The solution, says Myburgh, is to partner with a South African employer of record (EOR), such as CROS, which specialises in the provision of employment-related services to organisations in a foreign country.