It can be paid as provisional tax
Most South African forex traders don’t get paid by a registered South African employer for their forex trading activity, which is a company.
In order to be legally compliant, these traders must register for provisional tax and pay two provisional tax payments every year, these traders must do so.
To make up for any deficiency in the second payment, a third payment, sometimes known as a “top-up,” may be made. Estimated taxable income is used to determine the provisional tax payments, which are then reported to SARS on an IRP6 return. Provisional tax must also be paid by companies.
It can be paid as tax deductible expenses
If you’re a South African forex trader, you’re allowed to deduct any expenses you incur in making money from your taxable income.
In order to keep track of all of their trading expenses, local forex traders should preserve receipts for everything from employee wages to training expenses to software purchases to office supplies to computer maintenance to bank fees.
A trader’s taxable income might also be reduced by asset depreciation (the wear and tear). Depreciation of a forex trader’s computer, for example, might be deducted from the profits he receives from his trading activity.
All expenses made in generating the income, whether through a registered company, a small business corporation, a trust, or in an individual’s personal capacity, can be deducted from the taxable revenue.
When you are taxed as an individual
People who trade forex as individuals and in special trusts are taxed according to the amount of money they make. If a trader’s total annual income surpasses a set annual threshold that is established by their age, they are only obligated to pay income tax.
When you are taxed as a business entity
There are a slew of other factors to consider before deciding whether to conduct business as a corporation or as an individual sole proprietor.
When setting up a corporation in South Africa, keep in mind that even if you later move to another country, the company will continue be taxed in South Africa.
A flat tax of 28% of taxable income applies to any forex trading conducted through a South African registered firm.
In contrast to corporations, small business corporations are exempt from tax until their taxable revenue exceeds R75, 750.