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: This 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 $1000 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).
[Tweet “Self-Publishing in South Africa: ITIN, Tax, How to Get Paid #selfpubSA”]
You know your stuff!
This is so helpful!
Thanks for educating us.
Thanks so much. It’s so awesome to have SA relevant info!
You’re welcome!
Rachel
I you want to publish on iBooks, without a ITIN, will you then still be subject to the 30% withholding tax from the IRS?
Hi Terence
I’m actually not certain about that. The best thing to do would be to ask Apple directly: https://developer.apple.com/contact/ Or you could begin the sign-up process for an iTunes Connect account and you’ll probably find out along the way.
Terence , in South Africa you must simply declare the income you received from book sales as part of your annual income for tax purposes. The percentage tax you will pay will depend on your overall income, according to the progressive tax scales in in South Africa.
Do I pay tax if I have a payoneer card that I withdraw from my ATM? If the money comes from our SA ATM’s doesn’t that mean the ATM such as ‘capitec,nedbank,STD bank etc. Will track the card chip and send it to SARS ,SARS then phones you to pay tax when the withdrawal log of that card passes the tax bracket..?? This has been a huge worry for me.please advise.
Hi James
I have no idea what SARS does about tracking ATM withdrawals, but I do know that it is every individual’s responsibility to declare all their income on their annual tax return if it’s above the taxable amount. You should perhaps be paying provisional tax if your income isn’t a standard salary (http://www.sars.gov.za/TaxTypes/PT/Pages/default.aspx). If you’re worried about this, you should probably speak to a tax professional or make an appointment to speak to someone at SARS.
Hi Rachel
Thank you this was very helpful,Just want to know if you use Amazon
and you reside in South africa,Which option should one choose the 35% or 70% as you know South Africa is not listed on the 70&
Has this got to do with them originally only making check payments to South Africa.
Thx
Charles
Hi Charles 🙂
I’m not quite sure what you mean. On Amazon, the 35% and 70% royalty rates are to do with the price you choose for your title. So if you set a price between $2.99 and $9.99, then you can select the 70% royalty option.
Hi, is there an alternative to Payoneer for amazon or can we use smashword to also distribute to amazon?
You can use Smashwords, although I wouldn’t recommend it. There are other ebook distribution services with more user-friendly interfaces, faster update times, and better reporting. Some authors are using Pronoun now. Amazon is the largest retailer, and you’ll get the most benefit out of their platform if you publish directly through them, but if you can’t for some reason, then perhaps take a look at Pronoun (they pay authors via PayPal). https://pronoun.com/
Hello Rachel! Your blog seems to be the only South African website that gives a concrete guide to self-epublishing for South Africans. For this, I would like to thank you. I have a lot of questions that are jumbled in my brain so I will just ask a few (the ones I have managed to untangle):
1. When publishing with KOBO and Smashwords, do authors have to provide the respective companies with a tax number? / Do the companies just take out the tax from the set price for the ebook and the money you get, you then declare in SA?
2. When publishing with Amazon, can authors still provide the company with their SA tax number, as stated in your blog (or has this changed since April 2016)?
Hi Sujata 🙂
1. With Smashwords, you do need to fill in tax information. I don’t know if they now accept a South African tax number, or if you still need to get a U.S. tax number. I wouldn’t recommend using Smashwords, though. I’ve moved to Draft2Digital, and I find their platform easier to use, and their update times faster. For Kobo, I don’t think you need to fill in any tax information. You fill in the bank details for your local South African bank, and you receive royalties in rands.
2. On Amazon, yes you can fill in your S.A. tax number in the tax interview form.
For all the retailers, you should end up receiving ALL your royalties (we have a tax treaty with the U.S. which means they shouldn’t hold back any money for tax) and then you declare all those royalties as income in S.A. and pay tax on it here.
Hope that helps!
Dankie! Your help is much appreciated. I saw the trailer for your book series and it is brilliant. I would love to see it become a motion picture soon. It is high time South Africa produces good fantasy films. Why do we have to rely on overseas creators when there are such talented ones, such as you, in our own country?
Thank you so much Rachel, I’m now looking forward to publish my first ebook.
You’re very welcome, Nombuso!
Great site!
So glad I came across this blog.. You may not be a tax guru, but this it was well explained and makes complete sense
Looking forward to pursuing my dreams and being self employed
Hi Rachel
Awesome Site!
Thanks for the helpful tips on the tax issue for SA residents. I was reluctant to self publish if it meant I would have to pay tax in the US and in sunny SA. I mean, what’s the point of selling your works on Amazon if most of the earnings would be going to the respective tax institutions. Good to know this is not the case.
Hello Rachel
Great blog and information. Really helped me set some things straight. One issue, how do I decide the price of the book? I did all the work myself and sadly have to pay these print on demand fees. Not a happy newbie writer. But hey, I did not do it for fame and fortune, but for the love of telling a story. Any assistance would be appreciated.
George
Hi George 🙂
The best way to decide the price of both your ebook and print versions is to look at the market and see what other books in your genre are priced at. For ebooks, look at the bestseller lists on Amazon for the most popular price points. And for print, if you’re planning to sell locally, then take a look in some of the bookstores at the average price of the other books in your genre. There will likely be quite a range, depending on where the books are produced (books printed by publishers locally tend to be more expensive than the books that are printed by the tens of thousands overseas and sent here). Once you’ve got a general idea, you’ll have to choose a price that fits your goals and marketing strategy. (e.g. If you want to make money from paperbacks, you’ll need to price higher. If you want to get your name out there and break even, then you can afford to price lower.) I hope that helps 🙂
Hi Rachel
Thank you so much for this series of posts. I’ve been working through it systematically, and it’s brilliant :).
I have a question though – how do you get paid by PublishDrive? I see you say you use them to publish to Google Play. I’ve seen elsewhere that Google Play is particularly worth publishing on for the boost in Google search rankings that you get, so I don’t want to ignore that market.
Hi David 🙂
I’m glad to hear you’ve found these blog posts helpful!
PublishDrive actually JUST changed the way they do payments. (Literally yesterday). Previously, I received payment via PayPal. This is still an option, but you can now also receive payments straight to your bank account (at least, I hope so. I filled in all my new information this morning, so my next payment will hopefully come straight to my bank account). Now that PublishDrive is operating out of the US, you also need to fill in a W-8BEN form in order to be exempt from tax withholding, but it’s a pretty straightforward online form (on PublishDrive’s website), and it takes under 10 minutes to fill in.
Hi Rachel. Thanks for the info. I used your affiliate link when signing up for Payoneer.
They issued me with 3 bank accounts- one in the states, one in Germany and one in the UK.
I’m trying to set up my bank accounts now in Amazon, but I’m a little confused about something that I was hoping you could shed some light on.
I added 2 banks to my Amazon account- one for accepting USD and one for Euro. The European one automatically linked 5 marketplaces: Amazon.de, .fr, .es, .it and .nl.
The other marketplaces are linked to the US bank, including co.uk.
I then tried to enter a third (GBP) bank account into Amazon in order to receive my co.uk royalties, but they require a BIC and IBAN code which Payoneer doesn’t provide. (the Barkleys bank account only has Sort Code and Account number details).
how do you receive your co.uk royalties? do you just link them to your European bank account?
Thanks
Hi Brad 🙂
Thanks for using my affiliate link for Payoneer!
I’m not sure how to solve your problem … I opened my Payoneer account back when there was only the US option, so I’ve kept my account that way and haven’t yet bothered to get one for British pounds and for euros. So currently, all my Amazon royalties (no matter the currency) are converted into US dollars and paid into one US Payoneer account.
Sorry I can’t be of any assistance in this area! You’ll have to ask either Payoneer or Amazon (or both) what to do.
Rachel, you are simply the best and a very unselfish person!! I am so glad I found your page! Not everyone would share their secrets to success like you do! I would love to talk to you about my venture (almost done!) but it’s not fiction but an academic handbook. Is there another way or do you prefer to answer questions in this space?
You’re welcome, Daleen! If you’d like, you can email me. [email protected]. But I have zero experience with publishing academic books!
Hi Rachel, your site is really helpful! Regarding using Payoneer on Amazon, does the ebook buyer also need to be registered on Payoneer to be able to pay into my account?
Thanks
Hi Hilton,
I’m glad you’ve found my website helpful!
Amazon customers will not be paying you directly. They pay Amazon when they purchase ebooks. Once a month (60 days after the month in which the sales occurred), Amazon will pay you all royalties from that month. In your Amazon KDP account, you’ll fill in the bank account information that Payoneer gives you: bank name, account number etc, and Amazon will use that information to pay you like they would pay out to any normal bank account.
Ag you are a life saver! I was just about to jump into all this when I discovered your blog. This is going to make my life so much easier. Thanks!
You’re welcome, Stef! If you have any questions, just let me know 🙂
You have a note saying “The Payoneer link is an affiliate link” but you say nothing further about the link. Where can I find the link so that you and I can both be credited with $25?
Hello Rachel, you’re truly a Godsent with this blog for South African authors. Honestly!
I would like to confirm, if you have a South African tax number, do you need the ITIN?
Hi Sinqobile 🙂 No, you no longer require an ITIN. Your South African tax number should be sufficient 🙂
Hi Rachel is pronoun still in business as i can’t access their site.
Hi Ricado 🙂
No, unfortunately Pronoun shut down at the end of 2017.
Thanks for this information Rachel. There’s no jargon here and the information provided was very helpful. Thank you once again.
Good afternoon from the beautiful mountains in Champagne Valley Central Drakensberg. Thank you ever so much for this information. I am about to publish my first book Afrikaans Christian book on Amazon KDP and only today discovered that of course it is all linked to tax!
I am thinking of joining Payoneer through your affiliate link and hope that you are still writing and publishing?
Dearest Rachel
You have no idea how incredible this blog has been. My husband has written a book and we have been looking at how to self publish as a South African and felt SO overwhelmed until I found your articles!! Thank you SO SO much! You have saved us hours of backwards and forwards!!!
Regards
You’re welcome!