Professional esports athletes must register for tax.

The law is clear - income from esports by professionals is taxable.

There is a specific inclusion in the gross income definition (the definition used as the starting point to determine an individual’s taxable income) which states that amounts received in relation to services rendered – even if it is a voluntary award – will be included in gross income and subject to tax.

Since a professional esports athletes would either be seen as an employee of, or as an an independent contractor, of the company for which he/she plays (see The basics about contracts for esports athletes) if such employee receives a reward related to his job function, it will be considered gross income as it is linked to services rendered.

Thus winning prize money in a competition if you are a professional esports athlete would  be seen by revenue authorities (SARS) as being related to a job function.

Whether the prize could be cash or otherwise, the prize will still be subject to tax.

If it is a non-cash prize, the monetary worth of that specific item will be included in gross income and subject to tax.

Thus it stands to reason that all companies paying prize monies to professional athletes, and/or to the companies  for which they play, must satisfy themselves that they are complying to SARS rules. The companies receiving such prize money (which often call themselves MGO's) running professional teams need to register with the revenue authorities in regard to declaring their winnings and the withholding of tax on their athletes.

Additional reading:

• 2026 Calendar of events
• AEC24 - Champions of all of Africa - Protea Female Counter Strike 2 Esports Team wins AEC24
• AEC24 - Forged in battle - a Counter Strike story...
• AEC24 - Thato Maredi outperforms Bafana Bafana!
• Affiliation: Private Clubs
• Affiliation - Procedure to be followed by school clubs affiliating for the 2026 season.
• ACES - Avenging Bafana
• ACES - Thato advances to the knock-out stages!
• Events - Northern Cape Online Esports Provincial Championships - 24 January 2026.
• GEF - Clash Royale esports athletes may win a trip to Mumbai....
  
• National Team Trials - Who qualifies for MSSA National Team Trials?
  
• Results - Northern Cape Online Esports Provincial Championships - 24 January 2026.
• Sportsmanship Award - Sportsmanship Award - Northern Cape Online Esports Provincial Championships
• Streaming - Streaming of MSSA's Northern Cape Online Championships for the MLBB esports title.

Athlete's rights:

• Is a professional gamer in South Africa entitled to a salary?
• Professional esports athletes must register for tax.

E-SPORTS: BE AHEAD OF SARS’ GAME

Authored by: Kelsey Jayes, Tax Attorney & Ruan Botha, Tax Attorney at Tax Consulting SA

Often considered a waste of time and certainly an area of contention in most households, is the concept of gaming. Spending hours in front of a computer or console, whiling away time that could be used more productively, according to many parents. 

Viewed as an anti-social hobby that is of no value. However, this perception could not be more incorrect and outdated.

To the surprise of many people, and to the excitement of many others, professional gaming or “eSports” is a rapidly growing and extremely lucrative “hobby”. Some prize pools have reached as high as R347m. That’s not a typo

.

eSports?

While it’s not the Premier league or Super Rugby, eSports is a professional gaming competition whereby people from all over the world play video games against each other and the winners are awarded with a prize, usually in the form of money.

South Africa even has a controlling body for this, an organisation by the name of Mind Sports South Africa.

The ever-growing popularity of eSports has had both a societal and an economic impact in many countries, including South Africa, and the traditional views of video gaming has seen a shift from lazy and mindless, to strategic and stimulating.

The fact of the matter is that, while previously, gaming has been considered a complete waste of time, there now exists a tangible and profitable profession for the dedicated eSports men and women of the industry. Pac-man for a pay check? Mario for moola? You get the idea.

However, with great prize pools comes great responsibility. This responsibility is in the form of one’s Call of Duty, if you will. Taxes.

Gamers are, after all, engaged in a profession that generates an income for them. And, as with all professions, taxes must be paid on that income.

Classification Wars

To provide you with an example, let’s say you are a professional player of League of Legends (now, now Dota2 fans, this is merely an example), and you win a tournament where you are awarded a sum of money.

That money then gets paid to your “club/clan”, or the company who manages the team, and thereafter gets distributed to you as the player.

The burning question here is whether you, as the professional player, are considered an “employee” of the club, and are thereby earning remuneration. This is an important consideration as employers are required to withhold PAYE on remuneration paid to employees.

So, how do you know whether you are an employee of your club?

The answer lies in the manner in which you conduct your battles. Factors such as whether you are working at the premises of the club, the extent to which your gaming is supervised and your “working” hours play a role in this determination, this being regardless of your ranking or your KDA ratio (for all the noobs out there, this is short for Kill / Death / Assist).

It should be kept in mind that, where you as a gamer receive prize money in your personal capacity (without the clan/club level interaction) you have an obligation to pay tax on those funds received. There are no two ways about it.

For the clubs/clans out there who are managing and paying their respective players, have you considered the VAT implications of running the club/clan? If you haven’t, now’s the time.

Battlefield: SARS

Now, don’t get me wrong, I am not saying that you should rush off to file tax returns for the winnings you receive from your valiant battles – one must first determine whether this is even necessary.

The first point of departure is to confirm the nature of your earnings. How, you may ask? Well, you seek the advice of a tax attorney, of course.

After all, when it comes to SARS, you can’t just reload at the last checkpoint. Once they are knocking on the door, you’re likely to find yourself in a bit of a tight spot.

​

Unless, of course, you are lucky enough to be a terrible gamer, or you’ve consulted the right people.

ENDS

MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za

For more information on Tax Consulting please visit:

Website:  http://www.taxconsulting.co.za/

LinkedIn: Tax Consulting South Africa

Facebook:Tax Consulting South Africa

Professional esports athletes must register for tax.

The law is quite clear.

There is a specific inclusion in the gross income definition (the definition used as the starting point to determine an individual’s taxable income) which states that amounts received in relation to services rendered – even if it is a voluntary award – will be included in gross income and subject to tax.

Since a professional esports athletes would be considered to be an employee of the company for which he plays (see The basics about contracts for esports athletes) if such employee receives a reward related to his job function, it will be considered gross income as it is linked to services rendered.

Thus winning prize money in a competition if you are a professional esports athlete would  be seen by revenue authorities (SARS) as being related to a job function.

Whether the prize could be cash or otherwise, the prize will still be subject to tax.

If it is a non-cash prize, the monetary worth of that specific item will be included in gross income and subject to tax.

Thus it stands to reason that all companies (which often call themselves MGO's) running professional teams need to register with the revenue authorities in regard to declaring their winnings and the withholding of tax on their athletes.

Also read:

• Professional esports athletes must register for tax.
• Sponsorships of athletes.
• Prize Money

Confused by sports law - then read this!

Employees of Sport and Recreation South Africa: 

It is often said that South Africa law is becoming too complicated. This is debatable, it certainly seems to be proving a challenge for the Minister of Sport and Recreation and his department.

Let’s start by sketching some background. The Companies Act, 2008 provides for the creation of a company known as a Non Profit Company (also known as an NPC). (The equivalent provision in old Companies Act was the Association Not For Gain or s 21 Company.)

The Non-Profit Organisations Act, 1997 on the other hand deals with the registration and regulation of Non-Profit Organisations (or NPOs). NPOs are in many cases voluntary associations which are registered in terms of the Act.

They are completely types of organisations and are dealt with differently. There are even different government departments which look after them.

There is no provision in the Companies Act for a company to become a Non-Profit Organisation (and vice versa). The Companies Act only provides for a company, under very narrow circumstances, to become a Co-operative, but other than there is no provision in that Act for a company to become something other than another type of company.

There’s a good reason for that – a member of the public dealing with a company needs to know who they are dealing with. If the company is allowed to chop and change what type of legal entity they are there would be no protection for creditors, etc. You enter into a contract with a company based on the provisions of the Companies Act and suddenly you find it is no longer registered with the CIPC because it has decided to become something else with different rules applying. You may not have entered into the contract if you knew the organisation was not a company.

It is also important to understand that if a Company is wound up in terms of the Companies Act it is dissolved and ceases to exist. If a new organisation starts up using the same name, it cannot be regarded as the same organisation.

To give an example, ABC Company employs staff and is registered for Income Tax, VAT, Employees’ Tax, etc and has all the relevant registration numbers. The owners decide to wind up and start over again as DEF Company. They have to retrench their staff, pay off any debts, and have the company deregistered. Then they have to register with SARS all over again as DEF Company. They also aren’t the employers of the staff at ABC Company. That all seems obvious.

The only way ABC can transfer everything to DEF is to pay all of ABC’s debts, transfer all left over assets to DEF, transfer the staff to DEF in terms of the Labour Relations Act, and then close ABC down. It is not possible for ABC to transfer it’s debts to the DEF without all the creditors’ agreement. Also, any court cases with which ABC is involved will end with its dissolution, unless the court grants it leave to substitute DEF as a new party in its place.

Any properly trained lawyer will tell you this. But it seems the Minister (Fikile Mbalula) and his department (SRSA) do not have access to any of them. Or at least his response to a question asked in Parliament by Mr MS Malatsi (DA) last year would indicate that to be the case.

When asked where he was aware that the non-profit company of SA Sports Confederation and Olympic Committee (SASCOC) had indicated its dissolution in its 2014 financial statements, the Minister responded that he and his department were “fully aware that SASCOC was converting from an NPO (sic) registered in terms of the Companies Act to a Voluntary Association” and further that “the SASCOC membership took a resolution at its Special General meeting on 9^th November 2013 to dissolve the NPO (sic) SASCOC as of the 31^st March 2014 and adopted a constitution and the formation of SASCOC as Voluntary Association. The Assets and Liabilities of the NPO SASCOC will be transferred to SASCOC the Voluntary Association.”

As we have seen, an NPO is registered in terms of the Non-Profit Organisations Act, and not the Companies Act. SASCOC is also a Non Profit Company, not an NPO.

There seems to be no consideration of the fact that debts can’t just be transferred. Otherwise anyone could just call a bank up and tell them that they have transferred their overdraft to their friend. Try that and see how far you’d get.

In response to further questions the Minister clearly refers to SASCOC NPC being wound up in terms of s 80(2) of the Companies Act.

But the Minister further states that a body called SASCOC is still recognised as the macro sports body, claiming that it is still in existence as a voluntary association now and no longer a company. As we have seen, once a company deregisters it ceases to exist and any new organisation has to start from scratch. It is not the same organisation.

This, of course, has far reaching consequences, which need to be dealt with otherwise it will create a legal headache in years to come.

Since a company cannot ‘convert’ to a voluntary association, if SASCOC has formed itself as a new organisation it will have to have done, at the very least, the following:

• Registered afresh with the tax authorities.
• Signed new leases on all property and equipment it rents.
• Transferred all its staff from the company to the association, in terms of the Labour Relations Act.
• Settled all its debts or obtained the agreement of its creditors to allow the new organisation to accept the liability to pay the debt.
• Terminated any court cases with which it is involved or obtained the leave of the court to substitute the new organisation in place of the company. It is known that SASCOC NPC is involved with several court case, including a high profile defamation case against Graeme Joffe. With SASCOC NPC dissolving, that will have to end, as it is inconceivable that someone can sue for defamation on behalf of someone else.
• Asked the Minister to end the recognition of SASCOC NPC as the macro sports body in terms of the National Sports and Recreation Act and recognise the new body in its place.

The Minister and his department, and SASCOC (whether the company or the voluntary association), seem to burying their heads in the sand and not dealing with a legal dilemma they have created by the hasty decision to deregister as a company, after they found the provisions of the Companies Act to be too onerous. If nothing is done to correct the mistaken which have been and are being made, future generations of sportspeople and administrators could find themselves paying for them.

As a matter of interest, SASCOC NPC is still registered with the CIPC as being in business, over year after it was supposed to be wound up. Even more interestingly, SASCOC was registered as a Non-Profit Organisation on 25 April 2006 and is still registered. So we have a SASCOC which is an NPC, one which is an NPO and one which is a voluntary association. Confused? You are not the only one.