Where the employer is satisfied that an employee will meet the necessary criteria for a Foreign Service Exemption to be granted, the employer is at liberty to not deduct PAYE from any remuneration derived by the employee in respect of services rendered outside the Republic. To qualify, the employee must have rendered services for the employer outside the Republic for :
- A period or periods exceeding 183 full days in aggregate during any 12 month period; and
- Continuous period exceeding 60 full days during that period; and those services were rendered during that period or periods.
The employer must keep a copy of each page of the employee’s passport and a copy of the relevant contract for the services to be rendered in a foreign country. Should it transpire that the employee does not qualify for the exemption; the employer will be held personally liable for any losses that SARS may suffer due to the non-deduction of the full amount of employees’ tax.
If an employee qualifies for the exemption, you can add it on SimplePay as follows:
- Go to Employees and select the relevant employee.
- Click on Add next to Regular Inputs.
- Select Foreign Service Exemption under Other.
- Select the Income Classification. “Non-Exempt Unless Specified” will keep the tax on the payslip unless edited, whereas “Exempt Unless Specified” will default the tax to zero.
- Click Save.
- To edit the exempt and non-exempt amounts, click on Foreign Service Exemption under Payslip Inputs, enter the amounts and save.