How to pay international contractors in South Africa [2025]

As of 2022, about 29% of South African workers are self-employed, meaning there's plenty of opportunity to hire freelancers. The country, which has a talented workforce and growing GDP in industries like finance and IT, is becoming a hotbed for independent contractors—no matter where the hiring company is headquartered. 

But before you hire a contractor in South Africa, you have to figure out how you’ll pay them. Our step-by-step guide takes you through everything you need to know about paying independent contractors—navigating South African laws, avoiding misclassification penalties from the South African Revenue Service (SARS), and handling currency conversions. 

Step #1: Classify your workers in South Africa

South Africa’s Labour Relations Act distinguishes employees from independent contractors, and companies need to be careful not to misrepresent an employment relationship. If employers are found to have misclassified workers, they’re subject to consequences from South African courts and the SARS, including penalties, retroactive benefits administration, and even imprisonment.

Broadly speaking, South African labor law defines an employment relationship as a contract of service, while a contractor fulfills a contract for services which, when rendered, ends the working relationship. 

Other distinctions made by South African authorities are laid out in the table below. Courts use a “dominant impression” test that ventures beyond the contract terms and looks at all the criteria together to consider worker classification.

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Step #2: Determine the best way to pay your contractors in South Africa

Before working with contractors, companies need to figure out how to pay them. Here are the most common options:

• Bank wires. You can open a bank account in South Africa and deposit funds, but you’d have to do the same for every country where you hire contractors. You could also use your native bank account to send a global wire transfer to pay a South African contractor. These come with service fees and are subject to exchange rates.

• International money orders. Similar to writing a paper check, this method involves sending a physical payment in the mail to a contractor living abroad. Companies usually go to a Western Union, bank, or post office to buy the money order. Then, contractors must go to their bank to deposit it once it’s received. In addition to being slow, money orders come with wire fees and unfavorable exchange rates.

• Digital wallets or payment platforms. These services, like Wise and Paypal, allow funds to be sent and received online. While some platforms can process transfers instantaneously, others are unavailable in South Africa (e.g., Venmo only works within the US). You also need to mind vendor fees and volatile exchange rates.

• Global payroll services. Since independent contractors handle their own taxes, they typically aren’t included in the same payroll system as employees, and send invoices instead. This can be a slow process. But Rippling allows you to pay South African contractors alongside your global workforce.

Step #3: Use global payroll software to process payments for South African contractors 

Instead of worrying about service fees, volatile exchange rates, and slow processing times, you can pay South African contractors through global payroll software.

With Rippling, you can pay contractors around the world in their local currency. You can also send locally compliant consulting agreements out for e-signature. Here’s a glimpse of Rippling in action:

Step #4: Ensure your South African contractors have the right tax information 

Employers typically don’t have to withhold and pay income taxes for South African contractors, and contractors don’t have to make any social security contributions.

However, self-employed workers in South Africa have to pay a provisional tax, based on their estimated taxable income, in at least two installments over the course of the tax year (the SARS details how to do so online in this guide). 

If the contractor earns less than ZAR 1 million, they can pay a turnover tax, which fulfills all their tax obligations at once. If the contractor is a sole proprietor, they can pay income tax on their business profits without filing a separate tax return. 

To file taxes, contractors typically need:

• A personal tax number (SARS TIN)

• ID number

• A registered eFiling account with the SARS

• A filled-out income tax return (ITR12)

• A filled-out IRP6 return for provisional payments

• Value-added tax (VAT) registration, if taxable income is greater than ZAR 1 million

Effortlessly manage contractors around the world

It's never been easier to pay your global workforce. With Rippling, you can pay international contractors in South Africa and around the world in one system.

Frequently asked questions about running payroll for contractors in South Africa