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

Sponsorships of athletes.

Athletes must know their obligations when accepting sponsorships.

To further elaborate on my article written on 11 January 2019, "Professional esports athletes must register for tax" it is important to explore the various incomes that a professional esports athlete may have.Sponsorships may be offered to players as equipment, clothing, watches, transport, travel, and monies.

Whether or not the receipt is of a capital nature, such amounts, whether of a voluntary nature or not, must be specifically included in gross income.

However, it should be noted that there is generally not an employer-employee relationship between the provider of the sponsorship and the player. Where no such relationship exists, and the player is not deemed to be an employee for employees' tax purposes, the sponsor will not be required to withhold employees' tax. However, the player is still required to disclose the amount of the sponsorship (in cash or otherwise) in his or her annual tax return. 

However, if the sponsor has sponsored the club or employer of the athlete and the club in turn provides its athletes with a portion of the receipts, the amounts will constitute remuneration and will be taxable in the hands of the athlete. In such a case, the club or employer is required to deduct or withhold employees' tax from the amounts paid to such athletes.

It should be stressed that it does not matter as to whether such sponsorship is in cash or not. For example, if a computer company sponsors a MGO in cash and computers, and such MGO distributes the computers to its athletes, then each athlete will have to have tax withheld on the market value of the computer as well as include the market value of the computer as gross income on his or her income tax return.  

Where an individual athlete is the recipient of the sponsorship, there may too beVAT implications should the athlete be a vendor. In cases where the individual is not a vendor, there will be no output tax by the recipient, and the sponsor will not be entitled to deduct any input tax on the payment.

Also read:

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

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

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