Foreign business may be able to avoid South African labour and tax law obligations.It is therefore no surprise that an increasing number of South Africans now work for foreign companies. However, there are aspects to watch out for.
“Currently, where a foreign employer does not have a ‘representative employer’ that pays remuneration to their South African employees, there is no obligation on the foreign employer to deduct employees’ tax from the employee’s salary. In this case the employee would have to pay provisional tax on the income to Sars.”
Palmer warns that foreign employers with top level management working remotely in South Africa must keep the risks of shifting the place of effective management of their company to South Africa in mind. He says sometimes South African residents are hired to work remotely for foreign companies as independent contractors rather than employees, enabling the foreign business to avoid the South African labour and tax law obligations that would ordinarily apply.