Per Diem

South African employers can provide subsistence allowances to cover expenses incurred during business travel. The South African Revenue Service (SARS) establishes tax-free limits for these reimbursements. When employees receive allowances within these limits and meet specified conditions, the amounts are not considered taxable income.

Domestic Travel Allowances

When employers authorize employees to incur meal expenses while away from their usual workplace, reimbursements remain tax-free within prescribed limits. Any amount exceeding these limits becomes part of the employee’s taxable income.

Current domestic allowance rates:

Incidental Costs Allowance

For partial-day business travel where employees only claim incidental expenses:

These rates apply when:

• The employee must be away from their usual workplace
• The expenses are incurred for business purposes
• Proper documentation is provided to the employer
• The travel occurs during the specified portion of the day
• The total claimed doesn’t exceed the prescribed amounts

International Travel

For business travel outside South Africa, SARS provides country-specific daily allowances. These amounts are considered expended for each day or part of a day during which the employee is away from their usual residence.

Important travel considerations:

• Rates vary by destination country
• Allowances cover both full and partial days
• Documentation requirements apply
• Amounts are preset based on typical costs in each location

Mileage

South African employers have two options for compensating employees who use personal vehicles for business travel: a rate per kilometer reimbursement based on actual business travel, or a travel allowance providing a set rate per pay period.

Rate Per Kilometer

For the period from March 1, 2024, to February 28, 2025, the tax-free rate is set at 484 cents (ZAR) per kilometer, as established by the South African Revenue Service (SARS). This represents an increase from the previous rate of 464 cents per kilometer. Current rates can be found in the official SARS document here.

This simplified method applies only when no other allowance, advance, or compensation (except parking and toll fees) is paid by the employer. While employers may offer higher rates, any amount exceeding the prescribed rate becomes part of remuneration for PAYE purposes.

Travel Allowance

The following table shows rates per kilometer for determining allowable business travel deductions against allowances or advances when actual costs aren’t claimed. These rates apply from March 1, 2024, to February 28, 2025, as published by SARS:

Travel Allowance Clarifications

For travel allowance calculations, several key factors apply. Employers must include 80% of the allowance in remuneration for PAYE calculations, though this reduces to 20% if the employer confirms at least 80% business use of the vehicle during the tax year.

Fuel costs cannot be claimed unless the employee bears the full cost of fuel, and maintenance costs are only claimable when the employee covers all maintenance expenses. Fixed costs require pro-rata reduction for vehicles used less than a full year for business purposes.

Distance calculations must be supported by a logbook documenting both total distance and business travel during the tax year. Previous year’s rates can be found here.

Paperless

South African businesses can maintain accounting documents, including receipts and invoices, in digital format without retaining original paper copies. This electronic storage must comply with conditions outlined in Article 30 of the Tax Administration Act and Government Notice No 787.

Electronic Storage Standards

Digital records must meet ‘acceptable electronic form’ criteria as defined in Section 14 of the Electronic Communications and Transactions Act, ensuring:

• Document integrity
• Information completeness
• Consistent availability
• Timely access for SARS requests

Location Requirements

Digital records must typically be maintained at a physical location within South Africa. However, companies may receive authorization from a senior SARS official to store records outside the country.

System Requirements

Organizations must maintain system documentation that details their electronic record-keeping methods. This documentation should explain the specific procedures and controls in place for digital storage.

Retention Guidelines

All supporting documentation must be preserved for five years from either:

• The date of tax return submission
• The end of the relevant tax period

Sales Tax Rates

South Africa employs a value-added tax system as its primary indirect tax on goods and services consumption. The tax framework includes two rates:

A comprehensive list of zero-rated items can be found in the South African VAT Act.