Tag Archive for: SA Government

Andrew Stegmann

BUSA Statement on SA Moody’s Downgrade

The below statement was published by Business Unity SA.

Business Unity SA (BUSA) notes with dismay the decision by Moody’s Investors Service to downgrade SA to “junk status”.
It is an indictment on our country that BUSA needs to say this is not unexpected. Moody’s was the last of the major rating agencies to rate SA above junk status and had been indicating for some time their concerns about our lack of economic growth, bloated public expenditure, state of our SOE’s, our inability to make necessary structural changes in the economy and our labour market structure.


This rating downgrade comes at a time that the country is in the midst of pulling all its resources and capacity together to mitigate the impact of Covid-19 across economic, social and health sectors. The country’s resources and capacity are being stretched in addressing this extraordinary situation and the downgrade opens another major challenge for SA.


This is not the time for pointing fingers or starting blame games. We need to concentrate all the resources and capacity of our country towards the compact that is coming together to beat this virus. We recognise the urgency with which SA must respond to the Moody’s downgrade, but we do, as a country, need to mitigate the immediate economic impact of Covid-19.

If we fail in our endeavours to mitigate the negative impact of Covid-19 on our economy, we will be in a far worse position to resuscitate our economy post the Covid-19 crisis, thus making it virtually impossible to rebuild our economy to be rated again as investment grade.


So, we must commit to working together to deal with Covid-19, but also commit to work together to rebuild our economy post Covid-19. In making such commitment, the following remains pertinent and critical:
• Necessary structural changes in the economy
• The bloated public sector expenditure
• The wastage of scarce resources into SOE’s and other state structures that have no potential to deliver either social or economic returns
• Accelerating the processes at ESKOM to restructure the organisation so that it is fit for purpose and plays a critical role in a diversified energy generation and distribution environment. This includes urgently addressing the energy mix, accelerating the Renewable Energy Independent Power Producers Procurement Programme (REIPPPP) and implementing the Integrated Resource Plan (IRP)
• Ensuring legislation that erodes investor confidence is not considered or implemented
• Ensuring a single cohesive message from government, which must be that the most critical issue for SA is to do everything necessary to be rated again as an investment grade country, with this being the only focus.

We have come together as a country in the last few weeks to fight the Covid-19 outbreak. This “compact” must form the platform from which we now address the crisis of the downgrade. We have now got to channel all our resources and capacity to addressing these two crises. The critical component for this is decisive and urgent leadership from the President, his Cabinet and government. BUSA stands ready to work with stakeholders under such leadership.

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: [1], [2].

Andrew Stegmann

South Africa Begins Massive Coronavirus Testing Drive

Government will in the coming days roll out a large-scale screening, testing, tracing and a medical management programme, to manage the Coronavirus (COVID-19).

“We are now entering a new phase in the fight against the COVID-19 pandemic. Around 10,000 field workers will be visiting homes in villages, towns and cities to screen residents for COVID-19 symptoms,” President Cyril Ramaphosa said.

The President was addressing the nation, after recently declaring the National State of Disaster to combat the pandemic. His address comes as South Africa went into a nation-wide lockdown for the first time in the history of its democracy on Thursday March 26th, at midnight.

“People with symptoms will be referred to local clinics or mobile clinics for testing. People who are infected with Coronavirus, but who have no or moderate symptoms will remain in isolation at home or at a facility provided by government and those with severe symptoms will be transferred to hospitals,” the president said.

“Using mobile technology, an extensive tracing system will be rapidly deployed to trace those who have been in contact with confirmed Coronavirus cases and to monitor the geographical location of new cases in real time,” the President said.

The number of infections continues to grow as there are now 1,326 confirmed Coronavirus cases in South Africa.

“As a nation, we were deeply saddened to learn that, in the last few days, three South Africans have died from the disease. We convey our sympathies and condolences to their families and friends and to their communities,” the president said.

South Africans urged to stay home

President Ramaphosa reiterated his call to South African to stay at home during the lock-down period.

“Leave your home only if you need to get food and essential provisions, collect a social grant, buy medicine or get urgent medical care.

“The only people who can go to work are health workers, security and emergency personnel, those who work to keep our people supplied with food, medicine and basic goods and other providers of essential services as defined in the regulations,” he said.

The president said people who do go out should do everything they can not to get infected and not to infect anyone else.

“Some people may think this disease is something that doesn’t concern them and will never affect them. That it is something they only read about in newspapers or see reports about on TV.

“But it is very real, and it poses a great danger to every one of us and to our society. Let us not make the mistake of thinking this is somebody else’s problem. Every time you violate the regulations the government has issued or try to get around the rules, you are putting yourself and others at risk, and helping the virus to spread,” the president said.

Reaction to Moody’ decision to downgrade SA

The president noted that the pandemic is happening at a time when the country’s economy is under great strain.

Rating agency Moody’s recently downgraded South Africa to a sub-investment grade.

He assured South Africans that this development will not diminish in any way the country’s response to the Coronavirus pandemic.

“We are pushing ahead to implement the necessary health interventions and economic and social measures to contain the spread of the disease and alleviate its effects on our people.

“Within the constraints of the current crisis, we remain committed to implementing structural economic reforms to address weak economic growth, constrained public finances and struggling state-owned enterprises,” the president said.

Government is working together with its social partners to identify further measures that South Africa can take to limit the damage to the economy.

“Even as our country faces deep and pressing challenges on several fronts, there is no doubt in my mind that we will prevail.

“That is because South Africans have come together like never before to wage this struggle against this virus. Many businesses and individuals are making financial and other contributions to this cause,” the President said.

The president thanked the many businesses and individuals who are making financial and other contributions to this cause.

A nation pulling together

In addition to the financial pledges announced last week, the President welcomed the contribution by the Motsepe Foundation of R1 billion and by Naspers of R1.5 billion to the Coronavirus response.

“We are also extremely grateful to Mr Jack Ma, the founder of the China-based company Alibaba, who has donated vital medical supplies to South Africa and other countries across Africa.”

In a moving tribute, president Ramaphosa thanked the nurses, doctors and other health workers, social workers and frontline government staff, volunteers and NGOs who are leading the fight against the disease.

He thanked the 18,000 security personnel, drawn from the police, defence force, metro police and other entities, that are responsible for ensuring our safety.

“And then there is each of you, the 58 million South African citizens and residents who are standing together as one in confronting this national health emergency. Among us are the men and women who rise at dawn every day, and labour through the night to keep this country going.

“I speak of the farmworker who is helping to keep us supplied with food. I speak of the technician in the power station working shift after shift to keep the lights on. I speak of the caregiver in the old-age home, the childcare home and the hospice, who comes in every day to tend to the most vulnerable of our citizens.

“To the taxi driver, the refuse collector, the supermarket cashier, the hospital cleaner, the petrol attendant and all those essential services workers, you are our unsung heroes, and we salute you,” said the president.

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: [1], [2].

Andrew Stegmann

South African Border Closures and Travel Bans: COVID-19 Status

Travel restrictions and advisories are in constant flux as COVID-19 spreads. Please check with your local consulate or embassy for up-to-date details.

Travel bans have been imposed around the world to slow the spread of SARS-Cov-2 virus behind Covid-19, while others require voluntary self-isolation of either all foreign travellers, or those from specific countries.

South Africans are affected by some restrictions – especially in countries that have a blanket ban on travellers from places with known Covid-19 cases. South Africa has also restricted access to some nationalities.

The result is a moving target of a list of places South Africans may not (or should not) go, and a similarly in-flux list of nationalities that can expect at least intensive screening for fevers on arrival in SA.

Many countries have imposed bans and restrictions due to expire in mid-April, if not renewed or cancelled before then. Other countries have put in place indefinite bans, or have not specified timeframes. Bans typically exclude those holding diplomatic credentials, and in some cases those with specific types of work visas.

South Africans are mostly not currently welcome in:

South African are impacted by special measures when travelling to:

  • Australia: required to self-isolate for 14 days after arrival
  • Austria: expected to be added to the list of nationalities required to present a negative viral test for entry
  • Bermuda: required to self-isolate for 14 days after arrival
  • Croatia: expected to be added to the list of nationalities required to self-isolate for 14 days after arrival
  • Czech Republic: expected to be added to the list of high-risk countries, from which travel is banned
  • Israel: likely to be denied access, but may be admitted if they can show the ability to self-isolate for 14 days
  • Jordan: all international flights cancelled
  • Lithuania: may have to self-isolate for 14 days after arrival
  • Malta: required to self-isolate for 14 days after arrival
  • New Zealand: required to self-isolate for 14 days after arrival
  • Slovakia: required to self-isolate for 14 days after arrival

South Africa has banned access to people from:

  • China
  • Germany
  • Italy
  • Iran
  • South Korea
  • Spain
  • United Kingdom
  • United States of America

South Africa has imposed extra screening measures on people from:

  • Hong Kong
  • Portugal
  • Singapore

Points of entry closures

South Africa has closed the majority of its border posts following an increase in infections in the country.

South Africa has 72 ports of entry in the country which are land, sea and airports. Of the 53 land ports, 35 will be shut down with effect from Monday, 16 March in order to prevent further influx of people possibly infected with COVID-19. Two of the eight seaports will be closed for passengers and crew changes. To view eNCA’s map of the closures, click here.

For further information, please consult the World Health Organization and the National Institute for Communicable Disease (NICD).

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: [1], Belinda Fewings [2].

Andrew Stegmann

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].