With effect 1 March 2009 the definition of a PERSONAL SERVICE PROVIDERS (PSP) came into effect.

A company or trust is classified as a PSP if:


Any services that are rendered personally to a client of the company or trust by a connected person to the company or trust.



The person would be regarded as an employee had he rendered the service directly to the client,


The service must be performed mainly at the premises of the client and the service provider is subject to control and supervision as to the manner in which the service is performed,


More than 80% of the income of the company or tust from services rendered consists, or is likely to consist of amounts received from any one client,


The above conditions are not applicable if the company or trust throughout the year of assessment employs 3 or more employees who are on a full time basis rendering the service on behalf of the company. A shareholder or member of the company or trust, or a connected person to such person, may not be one of these 3 employees.

a: If 1 and 2 is applicable, the company or trust is a PSP b: If only 1 or 2 is applicable, the company or trust is not a PSP c: If 3 is applicable, the company or trust is not a PSP even if 1 and 2 is applicable.

NB: If the only ground on which the entity is declared to be a PSP is the "80% of service income" rule, the entity may supply the client an annual affidavit that it does not receive 80% of its service income from any one client. The client may rely on this affidavit in good faith.

Please note that the PSP is only applicable to a company or trust...and not an individual.

A PSP is taxed at a rate of:

** 33% for a company ** 40% for a trust

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