A South African company employed a Swaziland national, who is rendering the service in Swaziland, not in South Africa. He is paid from South Africa. Will he be liable for tax in South Africa?
Author: The Payroll Authors Group of South Africa
Important:
This answer is based on tax law year ending 28 February 2021.
Answer:
Please note that the provisions of the Income Tax Act, refer to the source of income. Due to the fact that the Swaziland employee receives his income from a source within the RSA (RSA based company), the income will be taxable in RSA. Source of income is not determined from where he exercises the services, but from where the income is paid. However, the employer must determine if the salary is subject to PAYE by looking at the Double Taxation Agreement (see attached). Article 15 of this agreement deals with Income from employment. Due to the fact that the employee is not a resident of RSA, and the services are exercised in Swaziland, the remuneration as derived is taxed in Swaziland.