Employer Tax Contributions

Tax Type	Rate	Base
PAYE (Pay-As-You-Earn)	Progressive income tax rates (18% - 45%)	Employee's taxable remuneration
UIF (Unemployment Insurance Fund)	2% (1% employee, 1% employer)	Employee's remuneration, capped at R17,712 per month (R212,544 annually)
SDL (Skills Development Levy)	1%	Total monthly payroll (if annual payroll exceeds R500,000)
COIDA (Compensation for Occupational Injuries and Diseases Act)	Industry-specific tariff	Total employee salaries (annual assessment)

Filing & Compliance

• Monthly Filing: Submit EMP201 declaration and pay PAYE, UIF, and SDL by the 7th of the following month (or last business day before the 7th if it falls on a weekend/public holiday).
• Annual Reconciliation: Submit EMP501 reconciliation and issue IRP5/IT3(a) certificates to employees by May 31.
• Record Keeping: Maintain accurate payroll records for at least five years.

Employee tax deductions in South Africa are determined by the Pay-As-You-Earn (PAYE) system, calculated based on earnings and administered by the South African Revenue Service (SARS).

Statutory Deductions

• PAYE (Pay-As-You-Earn): This is income tax deducted monthly from employee salaries based on progressive tax rates determined by annual tax tables published by SARS. As of 2025, these rates range from 18% to 45% based on income brackets.

• UIF (Unemployment Insurance Fund): Employees contribute 1% of their gross salary up to a yearly cap of R212,544, providing short-term relief in case of unemployment. The employer also contributes a matching 1%.

Voluntary Deductions

• Retirement Fund Contributions: While not mandatory, contributions to registered retirement funds are deductible up to 27.5% of the greater of remuneration or taxable income (excluding lump sums and severance benefits), capped at R350,000 annually.

• Medical Aid Contributions: Contributions to registered medical schemes qualify for tax credits. Monthly credits for 2025 are R364 for the taxpayer and the first dependent, and R246 for each additional dependent. Excess contributions and other qualifying medical expenses are eligible for further tax credits based on age and disability status.

• Donations to Approved Public Benefit Organisations: Donations to approved organisations are deductible up to 5% of remuneration after deducting retirement fund contributions.

Tax Rebates

Tax rebates reduce the overall tax liability. The 2025 rebates are:

• Primary: R17,235 (for all individuals)
• Secondary: R9,444 (for individuals 65 and older)
• Tertiary: R3,145 (for individuals 75 and older)

Other Deductions and Considerations

• Tax Year: The South African tax year runs from March 1st to the last day of February.

• Filing Season: Tax returns (IRP5/IT3a) are submitted during the filing season, typically opening in July and closing in October/November. Employers are responsible for issuing IRP5/IT3a certificates to employees.

• Travel Allowances: Employers sometimes offer a travel allowance, covering work-related vehicle costs. However, if not substantiated with logbooks and receipts, only 80% of the allowance is exempt from PAYE, while 20% is treated as income.

Employer Responsibilities

Employers are legally obligated to deduct PAYE, UIF, and the Skills Development Levy (SDL, 1% of payroll) and remit these to SARS monthly using the EMP201 form. They must also submit the annual EMP501 reconciliation and provide employees with IRP5/IT3a certificates for individual tax filing.

Please note: Tax laws and regulations are subject to change. The information above pertains to the 2025 tax year and is current as of February 5, 2025. It is advisable to consult official SARS resources or a tax professional for the most up-to-date information.