Andrew Stegmann

South Africa Holds Tax Equalization Payments Taxable

This information is  courtesy of Pete Scott, via WERC

In a case decided 6 September 2019, the Supreme Court of Appeal of South Africa held that payments by an employer for consulting services to expatriate employees were taxable fringe benefits. The case is BMW South Africa v. Commissioner for the South African Revenue Service.

As is frequently done by companies with employees on expatriate assignments, BMW followed a tax equalization process designed to ensure that the employees are not tax disadvantaged from the assignment. In doing so, BMW hired big 4 consulting firms to assist the employees with tax matters, including registration as taxpayers, preparation and submission of income tax returns, review of annual income tax assessments, preparation and submission of provisional tax returns, and resolution of disputes with the tax authorities.

The South African Revenue Service (SARS) took the position that the payments made to the consultants were taxable fringe benefits to the employees. BMW argued that the services were in fact for its own benefit in order to ensure that South African taxes were neither overpaid nor underpaid and that employees did not run afoul of the tax authorities. It also argued that the employees did not receive a benefit because they had no choice but to accept the services, and that the employees were placed in a financially neutral position with respect to their taxes.

The court rejected these arguments, holding that ancillary benefit to the employer was not enough to remove a payment from treatment as a fringe benefit when the employees received services for which they would have had to pay significant amounts had BMW not provided them. Accordingly, the entire amount paid was taxable to the employees.

This position is similar to that taken by the United States Internal Revenue Service.

Employers with expatriate employees in South Africa must begin including in their incomes the value of tax equalization services provided to the employees, with consequent tax gross-up issues.

To view information about the case, click here.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email info@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: Ben Bezuidenhout [1], [2].

Andrew Stegmann

No More Unabridged Birth Certificates Required for Minors Travelling to South Africa

SA’s tourism industry is celebrating, as the Department of Home Affairs finally made a U-turn on rules related to unabridged birth certificates for minors travelling to the country.

Home affairs minister Dr Aaron Motsoaledi confirmed in a Moneyweb Radio interview last week that unabridged birth certificates will no longer be required for foreign children travelling to South Africa.

“We have given the instruction that […] it’s no longer wanted. You don’t have to carry it, you don’t have to produce it,” he said in response to a question on the issue from Moneyweb’s SAFM Market Update business show host, Nompu Siziba.

“The argument from Home Affairs was that it was to stop child-trafficking,” added Motsoaledi. “Then we said no, no let’s not trouble tourists with this. Let’s find our own way of fighting child-trafficking, rather than using this method, which interferes with tourism.”

Motsoaledi, who was appointed home affairs minister following the general election in May, has had to deal with the issue which dates back to when Malusi Gigaba held the position.

Despite moves to relax unabridged birth certificate regulations in recent years, it has remained a thorn in the side of the tourism industry and has badly affected foreign tourist arrivals into SA since coming into effect some five years ago.

During his interview, Motsoaledi did not go into detail on how soon the controversial rule will be abolished. However, industry bosses from the Tourism Business Council of SA and the Southern African Tourism Services Association (Satsa) say an official announcement is expected as soon as this week.

TBCSA CEO Tshifhiwa Tshivhengwa, who was at the National Economic Development and Labour Council (Nedlac) meeting with President Cyril Ramaphosa and other business and government leaders last Monday, tells Moneyweb that the matter was discussed at the forum.

“We were told that unabridged birth certificate regulations will finally be abolished, and we’re delighted at the news … However, the minister needs to have written confirmation sent to the International Air Transport Association (Iata) in order for this to be effective,” he adds.

Tshivhengwa says the sooner Home Affairs and Iata meet and finalist the matter the better. “I understand that the Home Affairs Department’s Immigration Advisory Committee will be meeting on October 16, so I expect an announcement soon after that.”

“This issue has been a concern for us in the tourism industry for years and tourism operators into SA have said that they’ve been losing as much as 30% in business due to unabridged birth certificate requirements. However, the impact is likely to have been much worse if you consider would-be international tourists being turned off by this additional red-tape. They would not have bothered and chosen to go elsewhere,” he adds.

Satsa’s CEO David Frost, who has vociferously criticized the regulations from the start, hailed the government’s U-turn.

“We welcome the fact that it will finally be abolished, but it has taken too long and has done a lot of damage. It will take time for the tourism industry to fully recover from this,” he says.

“The private sector drives the tourism industry, and the government should have spoken to us before embarking on the changes five years ago. They never wanted to hear us then, but we are glad that they have finally heard us. This will be one major hurdle out of the way, but we have our work cut out for us to put SA back on the international tourism map,” he adds.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email marketing@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Andrew Stegmann

Langa, Khayelitsha, and Gugulethu Residents Can Now Get Unlimited Free WiFi, Courtesy of Google

Cape Flats residents in Cape Town, South Africa now have access to unlimited free WiFi, courtesy of Google. Over 100 WiFi towers, called Google Stations, were launched by Google South Africa across Langa, Khayelitsha, Gugulethu, Delft, Elsies River, and Philippi on Thursday.

Google Africa director Nitin Gajria said the areas represent some of the most under-served communities in the country, with high unemployment and crime rates. “By gaining access to information via the internet, we hope that people in these communities will get a more equal opportunity to learn and develop and live more empowered lives,” Gajria said.

Google said the WiFi will be accessible in residences, public areas, universities, transportation hubs and shopping malls. Alongside its WiFi rollout, Google also announced a $1 million (roughly R14.7 million) investment in South Africa to support the economic empowerment of girls and women.

Business Insider South Africa previously reported that Cell C is hoping to use lamp posts, bus stops, transport hubs and council-owned buildings in Cape Town as WiFi hotspots. The telecommunications company signed a memorandum of understanding (MOU) with the City of Cape Town last October, but no timelines for the project were given.

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email marketing@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].

Andrew Stegmann

South Africa’s New e-Visa System

South Africa will pilot its new e-visa system in the coming weeks as it aims to attract investors and people with skills that are critical to building the economy.

Speaking to BusinessTech recently, Department of Home Affairs spokesperson Siya Qoza said that the pilot will be relatively limited to begin with as it aims to test the resilience of the system.

“The pilot will be conducted with Kenya first at the OR Tambo and Lanseria airports,” he said. “At the end of the month, we will evaluate the project and look at which other countries to expand the e-visa system to.”

Qoza added that the system is quick and has been designed to be as user-friendly as possible.

He estimated that the entire application process would take around 20 minutes, provided the applicant has all of the necessary supporting documents ready for submission.

Should one of the required documents be missing, applicants can resume the process exactly where they left off at a later date, he said.

Other changes

Minister of Home Affairs Aaron Motsoaledi said that his department is also lowering turnaround times for critical work skills visas, which are now issued within four weeks in 88.5% of applications.

By comparison, business and general work visas are issued within eight weeks in 98% of applications, he said.

“The department has also located visa services within the offices of various investment facilitation agencies around the country.

“In addition, visa requirements have been simplified for countries such as China and India, which are key markets for tourism to South Africa,” he said.

South Africa recently waived visas for travelers from Saudi Arabia, United Arab Emirates, Qatar, New Zealand, Cuba, Ghana and Sao Tome and Principe.

While countries such as Qatar and Ghana already have visa-free or visa on arrival agreements with South Africa, it would be considered a serious boon if South Africans could travel visa-free to countries such as the UAE and New Zealand.

Home Affairs said it was currently in talks with these countries on two main issues.

“We have entered negotiations with these countries with the first priority being an implementation date for visa-free access to South Africa,” it said.

“Once this has been confirmed, our second priority is reciprocity.”

 

For information as to how Relocation Africa can help you with your Mobility, Immigration, Research, Remuneration, and Expat Tax needs, email marketing@relocationafrica.com, or call us on +27 21 763 4240.

Sources: [1], [2]. Image sources: [1], [2].