Rédaction Africa Links 24 with techfocus24
Published on 2024-04-05 13:46:28
South Africa is on the verge of welcoming its first group of remote workers on the newly established visitor’s visa designed for foreign employees. The Immigration Regulations have been amended to include the introduction of the ‘digital nomad visa’ in South Africa, effective from 28 March 2024, following the publication of a draft earlier this year.
The Second Amendment of the Immigration Regulations was promulgated in the Government Gazette, surprising many as it came just one day before the closing date for public comments on the draft version. This has led to questions about whether the Minister of Home Affairs considered any feedback from the public before making the changes. The final version of the amendment mirrors the draft released in February.
The new visa allows for a visitor’s visa to be issued for up to three years to foreign individuals who work remotely for a foreign employer and earn at least ZAR 1 million per annum. One of the main concerns raised during the draft stages was the proposed exemption for foreign employees working in South Africa from registering with the South African Revenue Service (SARS) if their visa is valid for less than six months in a 12-month period. This exemption would require an amendment to the Income Tax Act, 1962 (ITA).
Currently, tax liability for non-resident employees in South Africa is based on their source of income. While the ITA does not provide an exemption for short-term stays, most double taxation agreements (DTAs) would prevent South Africa from taxing non-resident employees who meet certain criteria. However, digital nomads from countries without a DTA with South Africa may still be liable for income tax unless the ITA is amended.
The implementation of the Second Amendment also raises concerns for tax compliance, as SARS will need to make adjustments to their tax filing requirements to accommodate the new visa. There may also be tax implications for foreign employers, as permitting employees to work remotely in South Africa could trigger a corporate tax liability. It is advisable for foreign employers to seek expert advice on tax, corporate, and employment law before allowing employees to work in South Africa under the new visa.
While the introduction of the digital nomad visa is a positive step, many foreign employers may be hesitant to allow their employees to work in South Africa until the tax and legal implications are clarified. Further amendments and guidance may be needed to address the concerns raised by foreign employers regarding corporate tax, employment law, and company law risks associated with remote work in South Africa.
