General sales tax is called Value Added Tax (VAT) in South Africa and is levied at 14 per cent.
The South African Revenue Service (SARS) administers the income tax system and is the government's main source of income. Income tax is levied on residents' worldwide income, with appropriate relief to avoid double.
Excise duties, paid by the manufacturer if based in South Africa, apply for high volume daily consumable goods such as:
- petroleum goods
- automotive vehicles.
Businesses should register with SARS Excise prior to manufacturing or dealing in these goods. South Africa charges an excise levy on certain goods that impact the environment (e.g. plastic bags and CO2 emissions). More information is available on the SARS website.
Companies are currently taxed at a rate of 28 per cent and an additional secondary tax (STC) is levied on companies at a rate of 10 per cent on all income distributed by way of dividends. A formula tax applies to gold mining companies.
Non-residents are taxed on their South African earnings only and not their worldwide income. It can therefore be advantageous to remain a non-resident.
For tax purposes:
- If a foreigner spends more than 183 days per tax year in South Africa, they will be considered a temporary resident.
- Deemed a full resident after roughly three years they will be required to pay taxes on a worldwide income.
South Africa and Australia have signed an agreement for the avoidance of double taxation.