This is post #5 in my blog series looking at self-publishing from a South African perspective. Check out the full list of posts on the Self-Publishing in South Africa page 🙂
ITIN (Individual Taypayer Identification Number)
When I began self-publishing in 2012, Amazon required non-US authors to provide an ITIN or EIN. If not, Amazon would withhold 30% of royalties for tax purposes. Not cool, especially when you have to pay tax in your own country. These days, things are a whole lot easier. Amazon asks you to take an online “tax interview” (which is just you filling in an online form) and you’re allowed to provide your South African tax number if you don’t have an ITIN or EIN. They then send you ALL your royalties, and you declare this as part of your income and pay tax on it here.
Currently, the only retailer that still requires an ITIN is Smashwords (and possibly Ingram Spark, a producer of print books. They ask for “tax exempt documentation”, but I haven’t finished the set up process there, so I’m not certain). So you technically don’t have to get an ITIN, because you can choose Draft2Digital as your ebook distributor instead of Smashwords (if you use a distributer at all) and avoid the ITIN hassle. (Although Draft2Digital distributes to fewer channels. More details on that in this post.)
However, if you would like to get an ITIN, here is the process:
- print out and fill in Form W-7, using the IRS’s instructions to help you. Here is the main IRS page about the application, and here is some assistance from Amazon KDP.
- visit a US embassy and get a copy of your passport notarised by a US notary (NOT certified. I found out the time-consuming way that those two things are not the same)
- mail the completed form and notarised passport copy to the IRS
- wait for them to process the application and mail you your ITIN documentation (this took about 8 weeks when I did it)
- fill in Form W-8BEN, which includes a section for you to fill in your ITIN, and send it to any retailer that requires it
Paying Tax in South Africa
As a self-employed author in South Africa, you should then register as a provisional taxpayer. This means you will pay tax at the end of August, based on your income for the first 6 months of the tax year, and again at the end of February, based on your income for the second 6 months of the tax year. Then, when you submit your tax return later on after the end of the tax year, the assessment calculation will tell you whether you still owe SARS anything more, or if they owe you a refund. (Hopefully it’s the latter!) The provisional tax system is to ensure that you don’t end up paying a ginormous amount of tax once a year upon assessment, but rather spreads it out across two or three payments. (Please note that I am NOT a tax practitioner (thank goodness!), and if you need help with this, you should visit SARS or get yourself an accountant.)
Tax-deductible expenses: While we’re talking about icky things like tax, and since it may not have occurred to you, I’ll just mention this: If you declare your legitimate expenses, that decreases your net income, which obviously decreases the amount of tax you have to pay. Yay! Again, I’ll stress that I’m not an expert in this area, but I’ve always been told that any expense incurred in generating income is a legitimate “business expense.” So keep all receipts, invoices and proof of payment! When you order 50 copies of your book from MegaDigital, that’s an expense. When you go to the post office and mail 5 print copies to the NLSA for ISBN registration purposes, keep the receipt. Did you buy a stack of A4 paper and toner for your printer so you could print out your gigantic manuscript for editing/proofreading purposes? I’m pretty sure that’s part of your “business” too. When BookBub chooses you for an ad (WHEN, not IF. It will happen! Positive thinking!), make sure to save the invoice after you’ve paid. (And yes, you need to keep the actual proof of all these expenses. If SARS picks you for auditing (and I ALWAYS get picked! ARGH!), you’ll need to send them a copy of all these receipts, invoices etc.)
I know. Tax sucks. But it’s part of being a successful self-published author 😉
Getting Paid via Cheque
I don’t recommend this option
This used to be the way we’d receive our royalties from Amazon (unless you happened to have an American bank account, or a British or European bank account, for the other Amazon stores). The cheques would take at least a month to get here (and that’s when we WEREN’T having postal strikes), and then we’d have to go to our bank, fill in foreign cheque deposit forms, and pay whatever fees went along with that. You can still choose to receive cheques from Amazon (as well as from some other retailers, such as Smashwords), but why would you when there are now faster, easier ways to receive payment?
Getting Paid via PayPal
Use for Smashwords
Smashwords (and Ingram Spark, if you use them for print) pays royalties via PayPal. Set up a PayPal account and get it verified by linking a credit or cheque card to it. Smashwords then sends your royalties once per quarter to your PayPal account, after which you withdraw the money from PayPal to your local bank account. Currently, the only South African bank that plays nicely with PayPal is FNB. You don’t have to have an FNB bank account though; you can simply get an FNB online profile. (FNB has a PayPal guide here.) When you link your PayPal account to your FNB profile (again, check the guide for details on how), you have the option to specify a non-FNB bank account. So when you log into FNB to withdraw money from PayPal, the money will go to the bank account you choose (an FNB account if you have one, or a non-FNB account if you’ve specified those details).
This sounds complicated, and it is a little bit when you first set it up, but it’s easy after that. I promise!
Getting Paid via Payoneer
Use for Amazon and CreateSpace
Payoneer has become the saviour of South African authors! It’s an online American bank account, which means you can receive payment in the same way those with an actual American bank account do! (You can also receive payment in British pounds and in euros.) You’ll need to wait for your bank card to arrive in the mail before you can use the account, which takes a few weeks. (The card is so that you can draw money at an ATM if you wish, and the card number serves as a security measure each time you withdraw money). Once your Amazon and/or CreateSpace royalties have been paid into your Payoneer account, you can then withdraw them to whatever South African bank account you’ve linked to Payoneer. Payment usually gets to my local account in less than a week. Easy peasy!
ANNUAL FEE: There is an annual fee of $29 (which may or may not have increased by the time you read this blog post). ADDITIONAL FEES: After months of using Payoneer, the only recurring fee I can see is 1% being deducted each time money is transferred from Amazon into the Payoneer account. There is no fee when I withdraw the money from Payoneer to my South African bank account (although it’s possible there is a fee worked into the exchange rate. I don’t know.)
*Note: The Payoneer link is an affiliate link. If you use that link to sign up for a Payoneer account, you and I will both be credited with $25 from Payoneer after you receive your first $100 into your Payoneer account 🙂
Getting Paid via Direct EFT
Use for iBooks, Kobo, Draft2Digital
Hallelujah! This is the best and easiest way to be paid, and, fortunately, there are some retailers that now pay into South African bank accounts. iBooks, Kobo and Draft2Digital are amongst these enlightened retailers (and MegaDigital, of course, which is a South African print-on-demand company).