South Africa Payroll Services

At Bradford Jacobs, we navigate the administration of the South African payroll system for you. We do the work, so you do not have to.

South African Payroll

South Africa is arguably the most sophisticated nation on the African continent in terms of financial services, industry and manufacturing as well as business services. The country at the southern tip of Africa is therefore identified as the ‘gateway’ for companies wanting to increase their profile throughout the continent.

South African flag
South African flag

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Foreign companies planning this move must make the correct decisions, especially if planning to relocate staff or hire locally and operate their payroll. In the latter case, the essential first step is to establish a legal entity in the country, with the most attractive choice being a private company whose shareholders have limited liability. South Africa’s economy poses challenges but attracts many international companies. Subsidiaries of foreign corporations include Mercedes-Benz, Nissan, Toyota and Volkswagen from the automotive sector alone.

The World Bank identifies that Foreign Direct Investment will have a critical influence in fueling growth, creating jobs and relieving high unemployment, with incoming companies attracted by a combination of low operating costs and well-developed logistics and infrastructure. South Africa provides Special Economic Zones (SEZ) and Industrial Development Zones (IDZ) with the possibility of preferential corporate tax rates. This is plainly an attraction for incoming companies, but the temptations and attractions come with risks. However, there is a no-risk route to access South Africa’s potentially rewarding market.

Bradford Jacobs’ Professional Employer Organisation (PEO) and Employer of Record (EOR) platforms and networks provide complete answers to every question your company will encounter before you move into the economy, especially when it comes to operating payroll.

  • Remote payroll – This option allows businesses to operate under a single payroll system, by adding employees in South Africa to your parent company’s payroll. However, these employees must operate under different regulations, which is likely to cause problems.
  • Internal payroll – You may operate payroll for your subsidiary, especially if you are committed to growing your company’s presence in South Africa. However, this does require hiring dedicated HR staff who understand South African employment and compliance laws.
  • South Africas’ payroll processing company – If you are considering outsourcing, then working with a South African payroll company will help in processing your payroll – but not when it comes to compliance.
  • South Africas’ payroll outsourcing – However, there is another option available that solves both concerns – by working with Bradford Jacobs. We can handle payroll and compliance for all your employees in South Africa. We take the administrative stress off your shoulders so you can focus on what you do best.

Foreign companies expanding their international profile by moving into South Africa can capitalise on its high-level financial and business services as a base for further exploration of Africa’s economies. Initially, they will revolve around payroll, whether companies move their staff into the country or recruit locally. The potential is clear but making a move comes with challenges and pitfalls.

Employment laws, payroll and tax regulations are areas where you cannot afford mistakes. The typical choice is establishing a private company that protects its shareholders against liability. The subsidiary must be registered with the Companies and Intellectual Property Commission (CIPC) and is governed by the Companies Act. Taking this major step requires an in-depth understanding of the procedures for registering employees. These include the following:

  • Employers must register with the South African Revenue Service (SARS) within 21 days of starting a business and register employees with SARS’ ‘eFiling’ system to automatically begin the process of obtaining their Tax Reference Number (TRN).
  • Obtaining the employees’ Notice of Registration (IT150) from SARS, which shows their TRN and the South African ID or passport number.
  • In the formal economy, employees are registered for the Unemployment Insurance Fund (UIF) and the Compensation for Occupational Injuries and Diseases Act fund (COIDA). Note: there is no comprehensive social insurance system in South Africa.
  • Non-South Africans must have a valid work visa before starting work and must have an employment contract from the employer to apply for the visa.

Foreign companies establishing legal entities in South Africa must meet various requirements to operate payroll. The most popular choice for a subsidiary is to open a private company, which offers protection against its shareholders’ liability. As with all domestic companies, the subsidiary is governed by South Africa’s Companies Act (2008) and by its own Memorandum of Incorporation (MOI) and registered with the Companies and Intellectual Property Commission (CIPC).

Procedures include the following:

  • Register the company name, the MOI and Articles of Association with the CIPC.
  • Register with the South African Revenue Service (SARS) to pay all categories of taxes and remit employees’ deductions from payroll.
  • Obtaining the company’s Registration Certificate (Cor14.3) from the CIPC.
  • Register with the Unemployment Insurance Fund (UIF) and the Compensation for Occupational Injuries and Diseases Act (COIDA) fund. Note: there is no comprehensive social insurance system or national health program, and therefore, no significant levies for social insurance taxes.
  • The company name must include ‘Proprietary Limited’ or ‘Pty Limited’ after the name.
  • Register foreign shareholders as ‘non-resident’ with the CIPC to comply with exchange control regulations and register at least one shareholder and one director with the CIPC.
  • Open a corporate bank account.
  • There is no minimum share capital requirement generally, although sectors such as insurance and banking impose minimum limits. Foreign investment must comply with exchange control requirements.

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