National Treasury on Wednesday (6 March) categorically confirmed that it is forging ahead with its plans to introduce an ‘expat tax’ amendment to the South African Income Tax Act by March 2020. We wrote before about this, during its planning, here.
As it currently stands, South Africans working abroad for more than 183 days (of which 60 days are consecutive) were able to earn income free of South African tax.
Since the enactment of this amendment, South Africans will be required to pay tax in SA of up to 45% of their foreign employment income once it exceeds R1 million (approximately $75,000) per annum.
The new legislation has many expats riled up, with much confusion and uncertainty around the new laws, and many believing that it will not apply to them or that it will be unenforceable.
It has also brought into question whether young South Africans who are working abroad for a short time are tax compliant.
“Yesterday, National Treasury held a workshop to put SA expats out of their misery, although after the workshop it appears that misery is all that awaits them,” Tax Consulting SA said.
While Treasury had stated at the start of the workshop that it will only deal with administrative and implementation issues, attendees, again, raised policy concerns included in their submissions.
“At one point the National Treasury panel stated, in rebuttal to the amount of submissions brought before them, ‘make another three submissions, make nine, we will look at them but we take instructions from our political superiors’ – an eerie feeling that public concerns are not top of their agenda,” Tax Consulting SA said.
The devastating impact on the South African Economy
According to Tax Consulting SA, the impact of the amendment on the economy and workforce could arguably be more devastating than the effects felt by individuals.
“The reality is that with this amendment, any additional cost would ultimately have to be borne by the employer, as no expat would accept an assignment without these benefits and, to ensure that these assignments remain lucrative, the employer would have to increase the expat’s package,” it said.
It added that payroll personnel, SA expats and in fact SARS officials are in for many growing pains and an overall torrid time when the amendment kicks in.
“The only comfort, albeit cold, that was offered was that SARS will set up a dedicated head office function that would deal with matters pertaining to the amendment,” it said.
“The truth is, however, that neither Treasury nor SARS, who was also in attendance, had many answers to allay the fears of stakeholders.”
Financial emigration?
One attendee mentioned a very irate client of his who did financial emigration to Malta, believing financial emigration will completely absolve him from South African tax – where in reality Financial Emigration was clearly not the correct approach to follow based on his specific set of facts, said Tax Consulting SA.
“This is a prime example of someone who prima facie used an incorrect process to try to dodge taxes and in the process made fraudulent statements to SARS and SARB,” it said.
“One must wonder if SARS and SARB will, as they should, follow up with this advisor to look into the affairs of this taxpayer and others who may have also acted on incorrect advice and who have abused the Financial Emigration process.”
It added that the solutions to this amendment are now becoming very limited.
“The expat exemption only relates to South African’s who are tax resident, so the obvious answer would be to cease tax residency of South Africa,” it said.
“However, doing this isn’t as simple as one might think. There are different options when doing this, but by far the cleanest and most direct approach would be to financially emigrate, provided, as noted above, correctly done.
“Once one becomes a non-tax resident, their foreign earned income and their foreign assets are protected from the grips of SARS and this also gives protection against South African capital gains tax on most assets (you still have to pay Capital Gains Tax on South African fixed property when you sell) and protection against estate duty.”
For those who cannot Financially Emigrate due to their factual circumstances, you would now be encouraged to start looking at double tax treaty protection, where applicable, it said.
“There are also additional international localised structuring opportunities available for those who are not working in double tax treaty countries, but again we must caution that we have seen numerous ‘products’ being punted which are closer to tax evasion versus tax avoidance.”
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].
New Tech Drives Demand for Mobile Payments Access in Middle East and Africa
Mobile payments represented more than 30 percent of the total social media conversation around payments in the Middle East and Africa, with total mentions doubling over the prior year.
Now in its sixth year, the study, developed in partnership with PRIME Research, analyzed more than 3.3 million conversations globally and 90,000 conversations in the Middle East and Africa from the past year across social media channels including Twitter, Facebook, Instagram and Weibo.
Interest in new technologies
People are looking to newer technologies to have an impact on their lives. In the past year alone, such mentions on social media increased 30 percent globally since the last study.
Today, nearly 20 percent of all mobile commerce payments are focused on contactless payments and mobile wallets. Beyond these primary focus areas, consumers are interested in how artificial intelligence, QR payments and wearable payments will impact their lives.
Overall, people are increasingly positive toward these newer technologies. In the Middle East and Africa, virtually all (95 percent) mobile wallet conversations were favorable, with 22 percent of posts praising the speed, efficiency and simplicity of these products.
“In the fast-evolving world of digital payments, it is crucial that we listen and understand the views of the people who ultimately use our solutions. The Mastercard Digital Payments Study highlights a willingness to adopt the latest payment technology solutions from users across the Middle East and Africa, and reinforces the increasingly important role that mobile payments play in everyday life,” said Gaurang Shah, senior vice president of Product Management, Digital Payments & Labs for the Middle East and Africa at Mastercard.
Primed for action with peace of mind
Among the conversations analyzed, consumers clearly continued to be focused on the security of their money and their data as a foundational requirement. In their posts, people recognize the value of new technologies on delivering this peace of mind across mobile payments.
Looking at the newer technologies:
While breaking news around data breaches drove one-fifth of data-related conversations, another 13 percent of these conversations noted the potential of digital security technologies, including blockchain, tokenization and biometrics.
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: Jonas Leupe [1], [2].
SA Treasury Confirms Expat Tax Amendment by 2020
National Treasury on Wednesday (6 March) categorically confirmed that it is forging ahead with its plans to introduce an ‘expat tax’ amendment to the South African Income Tax Act by March 2020. We wrote before about this, during its planning, here.
As it currently stands, South Africans working abroad for more than 183 days (of which 60 days are consecutive) were able to earn income free of South African tax.
Since the enactment of this amendment, South Africans will be required to pay tax in SA of up to 45% of their foreign employment income once it exceeds R1 million (approximately $75,000) per annum.
The new legislation has many expats riled up, with much confusion and uncertainty around the new laws, and many believing that it will not apply to them or that it will be unenforceable.
It has also brought into question whether young South Africans who are working abroad for a short time are tax compliant.
“Yesterday, National Treasury held a workshop to put SA expats out of their misery, although after the workshop it appears that misery is all that awaits them,” Tax Consulting SA said.
While Treasury had stated at the start of the workshop that it will only deal with administrative and implementation issues, attendees, again, raised policy concerns included in their submissions.
“At one point the National Treasury panel stated, in rebuttal to the amount of submissions brought before them, ‘make another three submissions, make nine, we will look at them but we take instructions from our political superiors’ – an eerie feeling that public concerns are not top of their agenda,” Tax Consulting SA said.
The devastating impact on the South African Economy
According to Tax Consulting SA, the impact of the amendment on the economy and workforce could arguably be more devastating than the effects felt by individuals.
“The reality is that with this amendment, any additional cost would ultimately have to be borne by the employer, as no expat would accept an assignment without these benefits and, to ensure that these assignments remain lucrative, the employer would have to increase the expat’s package,” it said.
It added that payroll personnel, SA expats and in fact SARS officials are in for many growing pains and an overall torrid time when the amendment kicks in.
“The only comfort, albeit cold, that was offered was that SARS will set up a dedicated head office function that would deal with matters pertaining to the amendment,” it said.
“The truth is, however, that neither Treasury nor SARS, who was also in attendance, had many answers to allay the fears of stakeholders.”
Financial emigration?
One attendee mentioned a very irate client of his who did financial emigration to Malta, believing financial emigration will completely absolve him from South African tax – where in reality Financial Emigration was clearly not the correct approach to follow based on his specific set of facts, said Tax Consulting SA.
“This is a prime example of someone who prima facie used an incorrect process to try to dodge taxes and in the process made fraudulent statements to SARS and SARB,” it said.
“One must wonder if SARS and SARB will, as they should, follow up with this advisor to look into the affairs of this taxpayer and others who may have also acted on incorrect advice and who have abused the Financial Emigration process.”
It added that the solutions to this amendment are now becoming very limited.
“The expat exemption only relates to South African’s who are tax resident, so the obvious answer would be to cease tax residency of South Africa,” it said.
“However, doing this isn’t as simple as one might think. There are different options when doing this, but by far the cleanest and most direct approach would be to financially emigrate, provided, as noted above, correctly done.
“Once one becomes a non-tax resident, their foreign earned income and their foreign assets are protected from the grips of SARS and this also gives protection against South African capital gains tax on most assets (you still have to pay Capital Gains Tax on South African fixed property when you sell) and protection against estate duty.”
For those who cannot Financially Emigrate due to their factual circumstances, you would now be encouraged to start looking at double tax treaty protection, where applicable, it said.
“There are also additional international localised structuring opportunities available for those who are not working in double tax treaty countries, but again we must caution that we have seen numerous ‘products’ being punted which are closer to tax evasion versus tax avoidance.”
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].
Cape Town Launches Africa’s First Floating Solar Farm
Marlenique Estate, a fruit farm and wedding venue just outside of Franschhoek, has just unveiled Africa’s first state-of-the-art floating solar PV system.
New South Energy was the company in charge of the installation, which was built on the farm’s dam to generate clean energy while minimising the dam’s evaporation rate and saving valuable agricultural land space.
This system marks the first commercially-operated floating solar system on the African continent as well as the largest, at 60kWp.
The floats for the solar panels are made of high-density polyethylene, which is recyclable and highly resistant to UV exposure and corrosion, giving the units more than a 20-year lifespan and preventing the contamination of the water.
The first phase of the project also includes the installation of a land-based solar PV system on the farm, allowing the farm to run 90% of its cold storage, irrigation and wedding venue facilities off the grid.
In the second phase, battery packs will be added to the current set up, removing the estate from the main power grid completely.
Economic Opportunities Minister Beverley Schäfer says, “This project has looked at some of the key sustainability issues we are facing in agriculture and the economy today – water and energy – and has attempted to find solutions. The system reduces the farm’s reliance on the electricity grid, and provides clean, affordable energy supply, while at the same time also reducing evaporation and saving water. The knock-on effect is that the business will save money in the long run, and create a business that is not only environmentally sustainable, but financially sustainable as well.”
Financial Director Carl van der Merwe, of the van de Merwe family who owns and runs the estate, says the installation would reduce the estate’s carbon footprint by half. The family’s decision to invest in solar followed the rising electricity prices and uncertainty around Eskom.
“Marlenique farm is the highest energy-user in our portfolio. We are aiming to be 100% green through solar energy solutions across our entire portfolio in the near future,” says van der Merwe.
Minister Schäfer says, “As the Western Cape Government, we have been urging businesses to take up solar PV as an alternative energy source. We’ve seen uptake grow from just 18MW in 2015 to 112 MW today, which reduces demand on the grid and helps to diversify our energy mix. We are pleased to see businesses like Marlenique responding to our call to invest in resilience in such an innovative way.”
CEO of New South Energy David Masureik has commended Boplaas for being innovators in the agricultural sector, saying, “I would also like to thank the government for their interest in solutions that will inevitably encourage the sector to thrive. Without the support and encouragement from national and local government for industry to become more sustainable and independent in terms of power solutions, our business would not exist. We are honoured to take part in positive change happening across the public and private sector.”
Capetonians have yet another reason to hold their heads high as our innovation on sustainable energy continues to soar with our ever-increasing consideration for the environment.
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].
South Africa-India Trade Relations Deepen
Two KwaZulu-Natal companies are on a mission to explore export opportunities for their products in India. Royalty Agri-Biz, which is based in Pietermaritzburg and Your Best Choice, which is located in Pinetown, will be part of the Outward Trade and Investment Mission to New Delhi and Mumbai in March 2019.
The mission is organised and funded by the Department of Trade and Industry (the dti). The purpose of the mission is to increase the trade of value-added goods and investment between South Africa and India.
The Director of Royalty Agri-Biz, Ms Fatima Cele says the trip to India could not have come at a more opportune time as the company is in the process of expanding by acquiring a tannery that will enable it to produce leather and leather products for the export market.
“We are currently sourcing cow hides from the local farmers and various communities. We then process them and supply people who make drums, shields, cushions and carpets. But we have decided to look at the bigger market and produce leather for the manufacturing of leather products. As part of our process to grow our business and achieve our objectives, we are in the process of acquiring a fully-fledged tannery from which we will be able to produce leather and leather products for the export market,” says Cele.
She also said that she will be using the trip to India to learn about the Indian leather market and to explore possible opportunities that her company can take advantage of and export leather and leather products to India.
“India is big in leather manufacturing and the mission will provide us with an opportunity to get to know how their market functions and how we can penetrate it as suppliers of leather or the actual leather products. We have undertaken a visit to China where we identify possible export opportunities and we are excited that our plans to export our products will gradually fall into place as we are optimistic about the India trip,” adds Cele.
The Chief Executive Officer of Your Best Choice, Mr Subasen Naidoo says his company is on the verge of breaking into the export market after shipping off samples of his moringa products to the United States of America, Colombia, Brazil, Ghana. Australia and the United Kingdom.
“We attended the Americas Food and Beverage Show in Miami through the assistance of the dti in October last year where we got a good order from Ghana and generated a number of good trade leads in America and other countries. We are excited that these leads are steadily developing into concrete deals. As a result, we are on the verge of signing contracts in Brazil and the US,” says Naidoo.
He adds that he will be targeting the fast food market in India and is confident that their proudly South African, organically-produced moringa Ice Tea and sugar-free energy drink will receive a warm reception in the country.
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].