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South Africa is undergoing significant changes in its approach to taxing remote workers and their employers, according to recent proposals by the National Treasury and the South African Revenue Services (SARS). Here's a summary of the key points: Removal of Distinction Between Remote and Non-Remote Workers: One major proposed change is to remove the current distinction between remote and non-remote workers. This means that employers of South Africa-based remote workers would be required to deduct pay-as-you-earn (PAYE) tax directly from their employees' salaries. Mandatory Registration for Foreign Employers: For foreign employers, the proposals include mandatory steps to comply with South African tax laws. These steps include registering for PAYE, UIF (Unemployment Insurance Fund), and SDL (Skills Development Levies), establishing a branch within South Africa, and obtaining a SARS income tax number. These requirements aim to ensure that foreign employers contribute to UIF and SDL at the standard rate of 1% of an employee’s remuneration. Residence-Based Tax System: South Africa employs a residence-based tax system, requiring all residents to pay tax on their global income, regardless of where it was earned. This system includes several tests to determine tax residency, such as the "physical presence" test and considerations for the source of income. For example, employment income from a company abroad is exempt from tax for the first R1.25 million if the individual spends a minimum number of days outside the country within a tax year. Contact me for details. Concerns Over New Regulations: The proposed regulations could potentially discourage foreign employers from hiring South African talent due to the added tax compliance complexities. This might adversely impact South Africa's attractiveness as a remote work destination and could lead to a reevaluation of employment contracts with South African workers. Public Commentary and Implementation: The proposed amendments were open for public commentary, with a deadline for submissions. The final bill, after considering public input, will be tabled in parliament for enactment. It's crucial for both remote workers and their employers, especially those based outside South Africa, to stay informed about these developments and prepare for compliance. These changes underscore a significant shift in how remote work is taxed in South Africa, with implications for both local remote workers and international companies employing South African talent. As these proposals are subject to legislative processes, those affected should monitor developments closely and consider consulting with tax professionals to navigate the new requirements effectively. _______________________________ Need assistance navigating the complexities of tax changes in South Africa? We have CA's that are also CFPs on the Virtual Adviser platform, ready and willing to help. info@virtualadviser.net

How an Employer of Record (EOR) Simplifies Life for Digital Nomads Employer of Record (EOR) services manage essential administrative tasks such as payroll, benefits, and tax compliance, easing the process for digital nomads to work internationally as salaried employees without the need for their employer to set up a local business entity. By ensuring compliance with local labor laws and tax regulations, an EOR reduces the risk of legal complications, penalties, and other challenges for both digital nomads and their employers. This can prevent costly fines and back taxes due to non-compliance with employment laws in foreign countries. Why Compliance with Tax and Employment Laws Matters for Digital Nomads As remote work continues to grow, it's tempting to wonder why it's necessary to remain in the same country as your employer, especially when working from home. However, working from a foreign country introduces a new set of legal requirements. For example, many nations do not permit work under a tourist visa, and obtaining the correct visa, such as a work permit, typically requires a local employment contract. Some countries now offer digital nomad visas, allowing remote workers to live and work for a set period. Still, these visas come with important considerations regarding taxes, social security, and benefits. Employers and digital nomads must understand the tax and legal implications of working abroad. For instance, employees may become subject to local income and social security taxes, and employers may need to establish a local presence or risk creating a corporate "permanent establishment" in the host country. There can also be complexities in managing taxes across borders, particularly in navigating double tax treaties or totalization agreements, which vary from country to country. How EOR Services Support Digital Nomads A reliable EOR service takes the burden of these administrative complexities off your shoulders. By managing payroll, providing benefits, and ensuring compliance with tax regulations, EORs offer a seamless solution for digital nomads and their employers, mitigating risks and simplifying remote work. Are you planning to become a digital nomad yourself? Would you like to offer this benefit to your employees? Please get in touch with us at support@quadlux.net or visit www.quadlux.net

As remote work becomes more common, employees are no longer confined to one state. But with this freedom comes the challenge of navigating different tax rules for out-of-state workers. Here's what to know about managing your remote team and streamlining payroll with the help of software and consultants.

The Canada Revenue Agency (CRA) has announced a new payroll policy for remote workers, and it is HUGE. Effective January 1, 2024, employees working remotely on a full-time basis will be subject to the payroll deduction rates of the province in which their employer* has an establishment, and that the remote employee could reasonably be considered attached to. A primary indicator of "reasonable attachment" is whether the employee would physically attend at the establishment to carry out his or her job duties, were it not for the full-time remote work arrangement. Secondary indicators include whether the establishment is where the employee receives work-related materials or instructions; where the employee obtains instructions regarding their job duties and responsibilities; if the employee's supervisors are located at the establishment; and whether the establishment is aligned with the nature of the employee’s duties‎. This is particularly welcome legislation in an area where there has often been confusion. Perhaps, however, the next step is paying* remote employees commensurate with the salaries of the company's jurisdiction - i.e. not based on where they live, but where they are being taxed. Last year, at Running Remote, many of my colleagues from across the globe dove into this topic with me. Employment taxes, and applicable legislation, are perhaps the most challenging aspect of remote work. Some solace? I will be in Lisbon again this year ready to answer any questions! Looking forward to seeing my colleagues at Running Remote from April 23-24, 2024, and Canada's continued development in this space. #law #lawyers #remotework #distributedteams #taxes #payroll #employment #hr #employmentlaw

✈ Remote Work & Tax Implications Remote work is the new norm, but tax implications can be a maze. Here are the essentials: 🔎 Know Your Workers: Properly classifying employees vs. contractors is crucial to avoid penalties. 🔎 Taxation Dynamics: Research state and federal laws to ensure compliance with remote worker taxes. 🔎 Avoid Double Taxation: Out-of-state employees may face initial dual taxation, but filing correctly ensures refunds. 🔎 Payroll Tax Considerations: Stay vigilant about state income taxes, SUTA, and local taxes to avoid surprises. 🔎 Additional Considerations: Workers' comp, health benefits, and employment laws demand attention for a smooth operation. 🔎 Streamlining Solutions: Consider expert payroll providers to navigate complexities and ensure compliance hassle-free. Mastering remote worker taxes is vital for businesses in today's landscape. Check out our full article below to stay informed, stay compliant, and empower your remote workforce for success! #RemoteWork #TaxCompliance #SmallBizSuccess

A recent article published by BUSINESSTECH warning remote South African workers that SARS is set to clamp down on their ability to earn income in the form of untaxed foreign exchange working for overseas countries, is nothing new. As the legislation stands currently, foreign companies who wish to employ South Africans locally are obliged to work through a local legal entity so that this legal persona can be held accountable for the withholding of PAYE and registration and levies for Workman’s Compensation, Unemployment Insurance Fund (UIF), and the mandatory Skills Development levy (SDL). The bottom line is that persons earning an income on South African soil, whether it be at a physical location or remotely irrespective of whether the employing instance is based locally or abroad, are obliged to declare this income to SARS so that they may be tax-assessed according to their circumstances. Taxes will be levied whether you operate as a full-time, part-time, freelancer, GIG worker, etc., or whether you operate as a sole proprietor or as a company. All the new regulations seek to do is to make it more difficult for persons earning income form overseas companies to escape the taxation net. This means that if you currently ply your trade for an overseas entity and have not declared the income you earn from this source, you may find yourself in trouble, facing the prospect of paying arrear taxes and penalties. What taxes are due will depend on how SARS deems the nature of the employment relationship you have with the overseas company: if SARS views the relationship as one of employer-employee, it will recover PAYE and other levies mentioned in the first paragraph. If you can prove that you have been operating as a sole proprietor or company, you will be liable for taxes, levies and penalties associated with those forms of engagement. The improved regulations do not mean that your days of earning an income from foreign companies is over. There are fully compliant options available to remote workers in South Africa, viz. 1. Approach an Employer of Record Organisation (EOR) in South Africa to act as your employer for the duration of any of the contracts you hold. An EOR will ensure that you are correctly classified and that the necessary tax regulations are adhered to on your behalf. 2. Request your foreign employer to register a legal entity in South Africa and to register with SARS. Unfortunately, this is usually a very expensive option and most foreign employers will only consider this option of they have a significant number of locally based South Africans working for them. Now is the time to protect your overseas income by speaking to an EOR such as OUTprof who will ensure that you comply with employment and taxation regulations. Contact us now: support@outprof.com Read more here: https://lnkd.in/dBCstQy7

This post is not a judgment, but rather an observation. For some reason unknown to me, the "remote" debate has picked up way too much steam and people are very angrily writing posts DEMANDING that employers NOT use the term "remote" unless it means "can work anywhere" I give both sides a ton of grace - we on the HR side are very familiar with these definitions and so it's understandable that people that aren't are getting the terms mixed up. Here they are: 1- Remote: The role does NOT need to report to the office and the company doesn't care if you do it from home, a cafe or a bar down the street. 2- Hybrid: The role is expected to split between remote and office 3- Office: The role is expected to report to the office. Travel does not come into play here, as we define travel for business being an exception to routine, not part of daily commute. This is what most companies use and it's basically "remote with restrictions"- meaning while you don't have to come to the office, you do have to work a certain distance (usually 100 miles) of a local headquarters. The reason for this is not companies looking to force RTO, it's because companies PAY YOUR PAYROLL TAXES and they have to be legally authorized to do so in that location. This means the company may require that you are based in a certain state or city in order to work there, regardless of your listed work location status (R/H/O) These are the definitions that have been around for decades. Yes companies should make this clear on the jd - most of them do, this is as new for them as it for us as candidates. If you want "remote without restriction" - ensure you are applying to companies that already operate in all 50 states, or look for 1099 work in which YOU pay for your payroll taxes so the company isn't liable. It blows my mind that Mike DiLeone an HR Director made a post explaining this - very clearly and people are attacking him for it because they don't "like" these definitions. One person even said "it sounds like a toxic workplace" lmao, what does??! These are just definitions! He didn't make them up!

📣 Heads up to all employers with remote employees! Starting from January 1, 2024, the CRA implemented a new administrative policy that will affect payroll administration for fully remote work arrangements. 📝 The new policy clarifies the relevant POE of employees, offering better guidance to employers on the applicable payroll deduction rates for their remote employees. This is particularly helpful where it was initially unclear which provincial deductions should apply. 💰 Under the new policy, an employee that is in a "full-time remote work arrangement" is considered to be reporting for work at an establishment of the employer if the employee is reasonably "attached to an establishment of the employer." However, it's important to note that the policy applies only for the purposes of determining the POE for payroll deductions and not for other purposes, such as determining employer health tax obligations. 👀 Stay updated and informed to ensure compliance with the new administrative policy. 💼

🌐 Attention Employers! Navigating remote work taxes can be complex, especially when hiring out-of-state employees. Each state has unique tax laws, from income taxes to unemployment contributions, and misclassifying workers can lead to penalties. 💼 Key Takeaways: ‣ Know Your Workforce: Distinguish between employees and independent contractors. ‣ Stay Compliant: Register with tax authorities and keep up with local regulations. ‣ Reciprocity Agreements: Some states allow tax exemptions for remote workers—know if your employees qualify! ‣ Consider Professional Help: Partnering with a payroll provider can simplify compliance and reduce costly errors. 👉 For tailored guidance on remote work taxes and payroll solutions, connect with us at Wildeman & Obrock, CPA's, PC! Let us help you focus on what you do best—growing your business! 💪✨ 📖 Read more: https://lnkd.in/ePatDBCK #RemoteWork #TaxCompliance #BusinessGrowth #WildemanObrock

On January 17th, Governor Pedro R. Pierluisi signed into law Act 27-2024, titled the “Act to Facilitate the Implementation of Remote Work in Private Companies and Encouragement to Establish Airline Home Bases in Puerto Rico.” (“Act 27”). This legislation, which became effective immediately, recognizes the unique opportunity presented by remote work to attract individuals to PR and seeks to incentivize employers without a presence on the island to recruit Puerto Rican individuals for remote work by establishing favorable legal provisions. Act 27 expands on the provisions of Act 52-2022 (“Act 52”), which amended the local Internal Revenue Code (“PR IRC”). Act 52 provides that effective for taxable years after December 31, 2021, businesses with employees engaged in remote work from PR are not considered “engaged in business in PR” under certain conditions—referred to as the “remote employee rule.” Employers adhering to the remote employee rule are exempt from withholding income taxes under the PR IRC on wage payments to remote employees. It is important to note that under Act 52, remote employees must make quarterly estimated tax payments. Under Act 27, the relationship between the employer and the remote employee is exclusively governed by the provisions of the employment contract—and not by local labor laws—when the employment relationship meets the following criteria: The employee is classified as an executive, administrative, or professional under the Fair Labor Standards Act. The employee is domiciled in PR; that is, the employee is physically present in Puerto Rico with the intention to stay indefinitely, as defined by PR's Civil Code. The employer is covered by Act 27—that is, it is not engaged in business locally, as defined by the PR IRC; and The employee performs work remotely. Please note that Act 27 employers must grant equal or greater benefits than those provided under PR law concerning workers’ compensation and non-occupational insurance. Furthermore, Act 27 employers must adhere to the local Employment Security Act, also known as Act 74-1956, unless the employee is eligible for unemployment benefits in a different jurisdiction. Lastly, Act 27 further provides that In instances where a non-domiciled employee voluntarily chooses to relocate to PR for remote work with an employer covered by Act 27, the employer is exempt from the obligation to comply with all local labor laws. In such a situation, the terms and conditions of the employment relationship shall be exclusively determined by those of the employment contract. In the absence of a written agreement, the applicable law of the jurisdiction where the employee is domiciled shall prevail. This rule ceases to apply once the employee establishes domicile in Puerto Rico, subject to the employer’s consent to this determination. At that point, the employment relationship shall align with the requirements of Act 27 for domiciled remote workers.