What is it?
Any payment to non-resident entertainers and sportspersons, for specific activities taking place in South Africa, is subject to a withholding tax of 15%. The resident (e.g. promoter, sponsor, person arranging the function or event) who is responsible to pay a foreign sportsperson or entertainer must withhold the tax from that payment and pay it over to SARS. Where there is no resident involvement the tax obligation is placed directly on the foreign entertainers and sportspersons. The 15% withholding tax is a final tax and no expenses or allowance may be deducted.
Who is responsible for paying the tax?
The resident who arranges or promotes the event and pay remuneration to the non-resident artist or sportsperson must pay the tax to SARS. Where a non-resident pays remuneration to the non-resident entertainers or sportspersons, the entertainers and sportspersons are directly responsible for the tax.
What will happen if I don’t comply?
A resident can be found guilty of an offence and pay a fine or go to prison for a period not exceeding two years if they fail to:
- Inform SARS of the planned event;
- Withhold the tax on non-resident entertainers and sportspersons;
- Pay the withheld tax over to SARS.
Failure to comply could also result in the resident being held personally liable for the payment of the withholding tax. Where the non-resident entertainer and sportspersons receive remuneration from a non-resident and do not declare taxes, that entertainer or sportspersons may be denied entrance upon his/her return to South Africa.
When will the withholding tax rate not be applied?
Normal tax rates will apply instead of the withholding tax rate where the non-resident entertainer or sportsperson is:
- An employee of a resident; and
- Physically present in South Africa for a period exceeding 183 full days during any 12 month period commencing or ending in the tax year in which the performance in South Africa took place.
How to pay the tax?
The following steps must be followed:
Step 1 – Notify
The resident who is primarily responsible for organising a performance by a non-resident entertainer or sportsperson in South Africa, must complete a NR01 – Notification of Performance of Foreign Entertainer or Sportsperson – External Form. If there is a non-resident employer this obligation is placed directly on the entertainers and sportspersons. This form must be submitted to the Visiting Artist Team within 14 days after the associated agreement has been made with the entertainer or sportsperson. The following documentation listed in paragraph D of the NR01 form must accompany the NR01:
- Signed copies of the agreements between the entertainers and sportspersons and the resident organiser/ promoter
- Passport copies
- Calculation of withholding tax
- Confirmation of all income earned while in SA
- Confirmation of the exchange rate provided by the SA commercial bank.
The resident must:
- Email the documents to [email protected] and cc [email protected].
Step 2 – Register the taxpayer and issue a return
The non-resident entertainer or sportsperson (taxpayer) will be registered for Income tax purposes and a reference number will be allocated.
Step 3 – Assessment
The income indicated on the tax calculation sent with the NR01 will be used to issue a tax assessment. Foreign amounts must be converted to SA Rand at the relevant spot rate provided by the bank on the date the amount was withheld.
Step 4 – Object or appeal
If the taxpayer would like to, he or she may object to the assessment. The taxpayer or promoter must complete a Notice of Objection (NOO) and email it to the person indicated in the letter of assessment within 30 days of the assessment. The auditor will consider the objection.
Step 5 – Resident’s liability to withhold tax
- The taxpayer / promoter must pay the tax over to SARS using the non-resident entertainer or sportspersons income tax reference number which will be shown on the assessment.
- Where the resident withholds the tax, the tax must be paid over to SARS on the non-resident entertainer or sportspersons income tax reference number before the end of the month following the month during which the tax was deducted or withheld.
- Where the resident fails to pay over the withholding tax:
- Where the resident is not registered for PAYE, SARS will register the resident for PAYE purposes and raise an additional PAYE assessment for the amount payable for the month in which the tax was due.
- If the resident is registered for PAYE an additional PAYE assessment will be raised for the amount payable for the month in which the tax was due.
- The resident must submit an EMP501 reconciliation to SARS at the end of the year of assessment.
- The non-resident entertainer or sportsperson is no longer liable for the income tax assessment raised and therefore a nil assessment will be issued to them.
Step 6 – Tax Clearance Certificate and Tax Credit Certificate
A tax clearance certificate may be requested to allow the resident’s commercial bank to release the net performance fee to the non-resident entertainers or sportspersons. A tax credit certificate will only be issued once the tax is paid in full.
If you need any help, see our contact details here.
IT-AE-02-G01 – Non Resident Entertainers and Sportspersons – External Guide
LAPD-Gen-G02 – Guide for Tax Rates Duties Levies
LAPD-Gen-G08 – Guide on the Taxation of Professional Sports Clubs and Players
LAPD-IT-G02 – Guide on the Residence Basis of Taxation for Individuals
LAPD-IT-G24 – Guide on Mutual Agreement Procedures
Legal-Pub-Guide-Gen01 – Taxation in South Africa
NR02 – Declaration by Purchaser for Sale of Immovable Property in SA by Non Resident – External Form