Authored by: Jean du Toit and Tanya Tosen from Tax Consulting South Africa

The amendment to section 10(1)(o)(ii) of the Income Tax Act (“foreign employment exemption”) takes effect from 1 March 2020.

Presumably, employees that would be affected thereby have done the necessary planning to sidestep any potential additional tax that may follow the amendment; or at least did their homework to attenuate the impact thereof.

A question with perhaps a less discernible answer is if employers with internationally mobile employees have done the same?

For the Johnny-come-lately employer, it is perhaps important that we provide a refresher course on what the amendment entails.

Currently, the foreign employment exemption permits South African tax residents to fully exempt their employment income earned outside South Africa, provided they spend sufficient time abroad.

From 1 March 2020, foreign earned employment income is no longer fully exempt and any amount above R1 million will be taxable.

The result is a larger tax bill and the question is who will pick up the tab?

Why Should Employers Be Concerned?
This may come as a massive surprise to some, but aside from the many administrative difficulties that employers will have to deal with, in some instances, the additional tax cost will be borne by the employer, as opposed to the employee.

The reason for this misfortune is simple; the employee accepted the assignment on the premise of a set amount of take-home pay and, assuming these employees are likely some of the company’s best resources, the employer may want to recompense the employees for the additional taxes if they wish to retain the said resources.

The realisation that you as the employer may have to foot the bill is only the first step to ensure that you are equipped to deal with the amendment.

Ideally, the employer should tackle this headache by first planning where they assign and resource  their expats from in a careful manner  to mitigate the additional tax cost as far as possible, followed by an equally difficult task, which is to adjust these expatriates’ remuneration packages to ensure they earn a market related net-pay whilst maintaining their agreed upon assignment remuneration packages as per their specific conditions.

Expat Planning
It is important to note that the additional tax cost can be managed effectively with proper planning.

By expat planning, we mean the employer needs to consult each expatriate to gauge their flexibility and educate them accordingly on how this change impacts them.

Depending on the circumstances, the effect of the amendment may be neutralised if certain employees are simply re-assigned to a different jurisdiction.

For lower tax jurisdictions, the employer and the employee may want to consider formalizing the expatriate’s emigration, if appropriate, as these cases will likely occasion the highest additional tax cost.

It is, however, not possible to give a blanket solution to reduce the tax cost, as each expatriate’s factual matrix must be considered individually.

Tax Gross-Up
Where the additional tax cost cannot be neutralised entirely, the employer will have to adjust the employee’s remuneration package.

This boils down to a tax gross-up, which accounts for the additional tax liability.

If you have an ounce of wisdom, this is not an exercise that should be done unaided.

The tax gross up can be conducted in different ways and we would always advise that the employer call in the assistance of a remuneration and tax specialist in these instances.

We often see this being done incorrectly and, with the proliferation of SARS payroll audits, this is not an item where one should take any chances.

Take Away
It would be devastating to lose key resources as a consequence of the incoming law change.

In saying that, in the current economic climate, no employer can afford to suffer any unplanned, additional costs. These will be some of the problems facing employers who simply wait for D-Day to come.

The only way to traverse the obstacles of post March 2020 is to plan correctly and be fully prepared.

A unique expat tax calculator is available, that allows both employers and individual expatriates the opportunity to explore their tax obligation post March 2020.

The calculator provides flexibility for selecting your own currency and exchange rates and allows for the comparison of pre-March 2020 versus post-March 2020 in order to get a good view of your position for future planning.

Follow this link to use the free calculator: www.taxconsulting.co.za/expat-tax-calculator

ENDS

MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za

ABOUT Tax Consulting SA:
Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance.

For more information on Tax Consulting please visit:
Website:  http://www.taxconsulting.co.za/
LinkedIn: Tax Consulting South Africa
Facebook:Tax Consulting South Africa

 By: Claudia Apicella, Head of Expatriate Tax Compliance at Tax Consulting SA.

South African expats have been subjected to vast amounts of conflicting information regarding the amended expat law change, causing uncertainty and panic in their preparations for 1 March 2020.

The cause for this is no doubt linked to the many “specialists” creeping out of the woodwork, so to speak, and offering an array of tax relief processes for South African’s residing abroad which ultimately portray “quick fix” solutions or incorrectly completed processes at exorbitant costs.

Many services that are being offered to South African expats, in relation to tax relief mechanisms, are unfortunately not in line with the requirements of the South African Income Tax Act No.58 of 1962’s two tax-residency tests, the South African Revenue Service (SARS) nor exchange control regulations of the South African Reserve Bank (SARB).

What is Financial Emigration?
One of the most common processes being widely publicised is Financial Emigration and has become the weapon of choice when offering South African expats tax relief on their foreign income in preparation for March 2020.

Although, when Financial Emigration is applied for correctly, the process does offer certainty that one has ceased tax residency in South Africa.

The key issue here is that the fundamental steps to achieve this are not always adhered to, thus resulting in a process not correctly done which creates tax exposure for South African expats.  

The harsh reality is that many expats are undergoing “Financial Emigration”, taking into consideration only the exchange control aspects thereof, and thus not dealing with important tax implications.

How will I know that my financial emigration is done correctly resulting in non-residence for tax purposes as well as for exchange control purposes?
Nicolas Botha, Tax Diagnostic Specialist at Tax Consulting SA

This is where careful due diligence is needed.

It is imperative that when undergoing the financial emigration process through a service provider, that all compliance steps for the financial emigration process are clearly defined by the provider to the client.

From a client perspective, the best first step will be to determine if the provider is offering financial emigration or formal emigration. These are often referred to as being the same process, however this is not the case.

Financial emigration- is a two-fold process which includes a SARS component dealing with the legal aspects of non-tax residency as well as the formal emigration component dealing with the SARB aspects of exchange control.

Formal emigration- on its own does not fully deal with the tax aspects.

The best way to check this is if the company requests you to outsource your tax affairs to a tax practitioner or consultant - meaning they only assist with formal emigration.

Tax aspect of Financial Emigration
The first step to a correct financial emigration is a tax check or compliance check with SARS.

Once this check is completed a reputable consultant will be able to advise on the best path forward for the process, in order to ensure that all the compliance “boxes” in regard to ceasing of tax residency are “ticked”.

In order to cease tax residency, one must meet the requirements of South Africa’s two tax residency tests and must complete a deemed disposal as per section 9H of the Income Tax Act.

The deemed disposal, is where one is deemed to have disposed of their worldwide assets, and immediately re-acquired them, thus bringing about a Capital Gains Tax (CGT) event – which is often referred to as an “exit tax” from South Africa.

Once the deemed disposal has been calculated, and the CGT event declared, an application to acquire an Emigration Tax Clearance Certificate (ETCC) should be made to SARS.

Acquiring this is the last step in formalising your non-residency from a tax perspective.

Thereafter you can look towards the second part of financial emigration – the exchange control aspects thereof.

Exchange Control Aspect of Financial Emigration
Roger Aires, Financial Emigration Specialist at Financial Emigration.

The SARB process required for a correctly executed financial emigration is actioned after the SARS process, in line with our Income Tax Act and exchange control regulations.

 The SARB process once concluded will further confirm one’s emigrant status for exchange control purposes.
For the SARB process of financial emigration, there is no requirement that the individual sell nor dispose of any assets in SA to include shares, trusts, properties and policies.

All assets can be kept as long as they are correctly declared to SARB.

One can also successfully complete the financial emigration process should they have properties that are bonded as well as vehicle finance.

In addition, one can keep SA bank accounts as long as they are with one banking institution with no need to cancel such bank accounts and open new blocked asset accounts with another bank.

Escaping Shark Infested Waters
The crux of the matter is that undergoing the correct financial emigration process will prove one’s intention to permanently reside outside of South Africa which coincides with South African tax residency tests – thus the formalisation of both exchange control and tax residency statuses being noted as “non-resident”.

We strongly recommend that proper due diligence is followed when using a provider for something as important as Tax Residency and Financial Emigration to avoid unwanted tax exposure come 1 March 2020.

Secure a provider who has registered tax practitioners and admitted tax attorneys with a long track record of successfully completed Financial Emigrations to help you navigate into safer waters.

ENDS 

MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za

ABOUT Tax Consulting SA:
Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance.
​
For more information on Tax Consulting please visit:
Website:  http://www.taxconsulting.co.za/
LinkedIn: Tax Consulting South Africa
Facebook:Tax Consulting South Africa

The latest unemployment statistics released by Statistics SA for the second quarter of this year paints a very dark picture of the state of South Africa’s labour market.

According to the statistics there has been an increase of 1.4 percentage points in unemployment from the first quarter of this year. This means that almost 7 million people are unemployed and just over 16 million people have a job.

A recent critical skills survey by Xpatweb shows several sectors in the economy are experiencing critical skill shortages. The sectors experiencing the most pressure include information and technology, engineering, finance and health.

The Critical Skills list is currently under review by the Department of Home Affairs and a new list is expected to be released before the end of 2019 for public comment.

However, the Xpatweb survey shows that the country is currently in desperate need of the following skills:

•  ICT Specialist
• Engineers
• Artisans
• Senior Financial Executives
• Health Sector
• Executive Managers
• Specialists & Academics
• Mining Executives
• Risk Managers
• Foreign Language Speakers

IT specialists and engineers remain top of the list of skills that are most difficult to find. Occupations in high demand in terms of the health sector, artisans, finance and ICT specialist have all increased this year.

According to the World Health Organisation (WHO), South Africa has an average of one doctor and one nurse per 1,000 patients. Hospitals are crowded, but understaffed, as shortages of skilled professionals in this sector continues to be an issue.

IT Specialists are becoming a highly sought-after resource in the wake of the Fourth Industrial Revolution (4IR). In a report published by the World Economic Forum over one-third of skills (35%) that are considered important in today’s workforce will have changed over the next five years.

By 2020, the Fourth Industrial Revolution will have brought us advanced robotics and autonomous transport, artificial intelligence and machine learning, advanced materials, biotechnology and genomics.

Government revealed in 2017 that South Africa has a shortfall of about 40,000 qualified artisans. This forced it to import skilled artisans from various countriesto complete time sensitive projects.

The Xpatweb survey results show that this still remains an issue, with 14.15% of the respondents indicating that it is difficult to find skilled artisans. This represents an increase of 45% from last year.

There is little doubt that skills are essential to economic growth, job creation and the future prosperity of South Africa.

It is a growing challenge worldwide, affecting industries from ICT to manufacturing to finance, with jobseekers lacking the required skills, and those with the desired capabilities and experience, in high demand.

Employers have to compete locally and internationally for skilled talent which increasingly places pressure on organisations.

The Xpatweb survey also showed that 62% of participants blamed the visa process as the greatest prohibitor to recruiting internationally.

However, several visa-related reforms are on the cards, which is in line with President Cyril Ramaphosa’s Economic Stimulus and Recovery Plan. This includes a review of the critical skills list expected to be published later this year.

Xpatweb is once again conducting its survey and the 2019 results will be submitted to the Department of Home Affairs and Parliament in line with the White Paper on International Migration and Department of Higher Education and Training National List of Occupations in High Demand and specifically to address any occupations not catered for on the new draft list.

The survey offers an opportunity for mobility and human resource practitioners to help shape law. (See link below to participate in this year’s survey).

In order to tackle the skills shortage in SA, it is important that policies such as the Skills Development Plan and the Skills Development Act support job creation and economic growth. It is equally vital that organisations contribute to building local skills, through increased training and development and putting in place succession planning at executive level.

For the youth, it cannot be stressed enough that when choosing a career, it is important to do the necessary research in terms of occupations in high demand and to use the information when making decisions about which path to pursue.

Link to survey http://www.xpatweb.com/critical-skills-survey-2019/

ENDS
​
MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za
ABOUT Xpatweb:
HOLISTIC EXPATRIATE SOLUTIONS
The Xpatweb group has been in existence for over 14 years and includes over 70 professionals, including immigration specialists, mobility practitioners, tax practitioners, attorneys, and chartered accountants. They offer holistic, client-centric, and fully compliant expatriate and work visa solutions. Clients can expect an exceptional end-to-end service that starts with an initial technical meeting to discuss any past challenges, a recommended optimal solution, and the creation of a roadmap and protocol for service delivery. They also offer an on-premises immigration audit service to confirm expatriate employees hold legally obtained, valid visas, and that their duties align with their visa conditions. In addition, their unique online immigration tracking system helps you to easily manage and track expatriate assignees across the globe, is fully customisable and dashboard-driven, and provides a secure repository for storing assignees’ documents.
For more information on Xpatweb please visit:
Website:  http://www.xpatweb.com/
LinkedIn: https://www.linkedin.com/company/work-permit-south-africa/
Facebook:https://www.facebook.com/xpatweb/

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By Jonty Leon, Legal manager at Financial Emigration, Tax Consulting SA

With several alarming indicators showing that more South Africans are leaving the country, an increasing number of people have started to research their options on how to move money offshore. Tax Consulting SA has also noted a large increase in individuals who are expatriating funds and investing these funds offshore.

There are various speculative reasons as to why people are moving money abroad.

Some are financially emigrating due to moving overseas. Other reasons include better investment opportunities abroad, the weakened South African Rand, and political instability.

Many of Tax consulting’s clients leaving, or having already left SA, wanting to formalize their non-Residency status, have mentioned discussions regarding land expropriation without compensation has led them to feel that their investments in South Africa are no longer secure.

What is exchange control?
Foreign exchange controls are various forms of controls imposed by a government on the purchase/sale of foreign currencies by residents or on the purchase/sale of local currency by nonresidents.

Exchange control in South Africa is dealt with in terms of the Currency and Exchanges Act No. 9 of 1933 and Regulations thereof.  

In my opinion, this law is quite antiquated. Over the past few years and for the foreseeable future, this law will continue to be phased out and simplified, but the process has been slow.

The exchange control system regulates the inward and outward flow of money in South Africa and it affects both individuals and companies.

At its core, exchange control in South Africa is controlled by the South African Reserve Bank (SARB). The SARB, however, entrusts authorised dealers (banks) to ensure their customers comply with the various regulations that control the sending and receiving funds across South African borders.

Jurisdictions that form part of the Common Monetary Area, however, aren’t subject to the same regulations. These countries include South Africa, Lesotho, Namibia and Swaziland.

Key considerations when moving money abroad
The exchange rate is a major determining factor as to when people take money out of South Africa. People obviously want to take money out of the country when the exchange rate is in their favour, i.e. when the Rand is stronger against currencies such as the Dollar, Euro or Pound.

Many times, ill-timed expatriation of funds can mean that a person ‘loses’ much of the value of the funds. Moving money outside of South African when the Rand is weak is like making a bad investment.

Be sure to time the expatriation of your money according to the exchange rate.

Compliance is another aspect of funds expatriation that needs to be carefully considered and adhered to. Those looking to expatriate funds must ensure they meet all the regulations related to the transaction.

Something as seemingly menial as providing an incorrect statement in any declaration to the SARB can lead you to be found guilty of an offence in terms of Regulation 22 of the Exchange Control Regulations, 1961. If you are found guilty of such an offence, you could be fined up to R250,000 or up to five years in prison – or both.

Tax Consulting SA also advises clients to find a reputable foreign exchange company when looking to expatriate funds. Many times, large banks do not give consumers the lowest rates, which leads to a major chunk of the funds being absorbed by the bank’s fees.

Look for a foreign exchange company that not only offers good rates but will assist you with meeting all the requirements and regulations of the SARB and SARS.

How much money can you move abroad?
There are two main ways of expatriating funds from South Africa, namely the single discretionary allowance and the foreign capital allowance. The single discretionary allowance is afforded to all South African residents who are 18 years or older and have a valid South African identity document.

This allowance is R1-million per calendar year per individual. The foreign capital allowance gives a South African resident individual, 18 years or older, the opportunity to expatriate funds of up to R10-million per calendar year.

Prior approval is needed to expatriate funds under the foreign capital allowance. The individual will be required to obtain a Tax Clearance Certificate from SARS before they will be allowed to expatriate money and prior approval is required.

If a person wants to move actual South African bank notes abroad, the limit when entering or leaving South Africa is R25 000 per individual. If you are travelling between countries in the Common Monetary Area, however, the amount is unlimited.

Those looking to expatriate funds will benefit greatly from speaking to an experienced tax consultant. Make sure you remain within the boundaries of the law, that you plan the fund expatriation according to the exchange rate and that you get a good rate from a foreign exchange company.

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
​

Authored by: Christopher Renwick, Senior Tax Attorney at Tax Consulting SA 
​
The current problem
Provisional taxpayers find themselves on the receiving end of penalties and interest from SARS on a regular basis. 
While they may attempt to dispute the penalties, they resign themselves to the payment of interest because, as many tax practitioners will tell you, that’s what you have to do.

“You cannot successfully challenge SARS on interest”.

Typically, a provisional taxpayer (assuming they are aware that they are a provisional taxpayer) fails to file their provisional return in February as required. 

4 months down the line and the result is a deemed “zero return”.The implication hereof is that the taxpayer then files an income tax return in tax season and is charged with an underestimation penalty of 20%

20% of the liability is levied as a penalty and, as salt in the wound, 10% interest per annum, calculated pro-rata, is thrown in for good measure.The result of failing to file a return and filing later is 25% additional liability.

Confusion
If I have confused you, don’t be alarmed. Most provisional taxpayers find themselves equally confused when solving the conundrum that is their tax affairs.

Long story short is, that most end up paying more tax than they should. In the form of penalties.

However, and this is where things become important, its not the late filing or failure to file that is the problem facing most provisional taxpayers. In fact, it’s solving the problem incorrectly that is causing the real issue. Bluntly, provisional taxpayers are settling their tax debt poorly.

Problem solving problematically
One method that taxpayers are utilising (whether on the advice of errant tax advisors or not) is to simply file their return and hope they can argue against penalties being imposed.

Others attempt a VDP (Voluntary Disclosure Programme). While a VDP has its merits and does prevent criminal sanction, in most cases, the application is inappropriate for solving a provisional tax underestimation.

A difference in approach
The frustration for me is that these two methods are not, whether individually or collectively, the most appropriate means of resolving a failure in provisional tax compliance.

In fact, why pay penalties and interest when you don’t have to.

The correct engagement with SARS will ensure tax compliance, without the payment of interest and penalties. Fact. However, if you want to engage with a tax professional to make sure you don’t pay penalties and interest, do it before you file your next return.

For best results
There exists a mechanism for the successful avoidance of penalties and interest.

Yes, it carries with it, its own complexities and administrative difficulties. That’s why it’s best to contact someone who has dealt with it before.

Should you choose not to, be prepared to add 25% to your tax bill. Personally, I’m adverse to tipping SARS.

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

​

According to reports from emigration assistance groups and local banks, South Africa is experiencing a sharp rise in people emigrating.

​Pew Research estimates that at least 900,000 people born in South Africa were living in other countries in 2017, with many of these people being skilled and educated.
 
Marisa Jacobs, Immigration Specialist and Director at Xpatweb, the largest independent immigration specialists in South Africa, says the company’s recently released annual Critical Skills Survey not only highlights the top critical skills that employers struggle to recruit within local borders but shows striking similarities between the jobs that are in demand in popular emigration destinations, such as the United Kingdom, New Zealand and Australia.
 
Which skills are the hardest to recruit locally?
The latest Critical Skills Survey, which is considered by the government, surveyed 110 companies, including JSE-listed companies and large multinational groups operating in Africa. Following last year’s survey, ICT specialists and engineers remain the most difficult to recruit, followed by artisans, senior financial executives, professionals in the health sector, executive managers, specialists & academics, mining executives, risk managers, and foreign language speakers.
 
“The most notable jump in figures are the number of South African companies struggling to recruit artisans, increasing by 45% from last year and professionals in the health sector which rose by a massive 200%” says Jacobs.
 
Work visa processes to recruit internationally are perceived as onerous
Over 85% of respondents indicated that they find it difficult to recruit critically skilled individuals and that an international search would help them find these skills, but that the work visa process was an inhibitor.
 
“Respondents indicated that the work visa process prohibits South African employers from recruiting internationally, citing onerous requirements and long processing times of the South African embassies abroad, as some of the major challenges they face. While this is a clear perception shared by the respondents, our experience has shown that if the person being recruited truly has a critical skill, we have never failed to obtain a work visa,” says Jacobs.
 
Skills leaving South Africa
South Africa notoriously doesn’t keep record of the number of South Africans who permanently leave the country, but other countries keep track of immigrants.
 
“Our survey results show that there is a very clear link between the skills that are needed locally and the professions that other countries are recruiting for, again confirming that skills shortages are a global challenge and South Africa is competing for these skills. Skills transfer to local teams and concession planning remains a key element for companies to develop their teams,” concludes Jacobs.
 
Xpatweb will launch the next Critical Skills survey earlier this year in time to provide input for Government’s new critical skills draft list, which is expected to be published later this year for public comment.
 
Visit www.xpatweb.com to access the full survey results.
 
ENDS
 
MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za
 
ABOUT Xpatweb:
HOLISTIC EXPATRIATE SOLUTIONS
The Xpatweb group has been in existence for over 14 years and includes over 70 professionals, including immigration specialists, mobility practitioners, tax practitioners, attorneys, and chartered accountants. They offer holistic, client-centric, and fully compliant expatriate and work visa solutions. Clients can expect an exceptional end-to-end service that starts with an initial technical meeting to discuss any past challenges, a recommended optimal solution, and the creation of a roadmap and protocol for service delivery. They also offer an on-premises immigration audit service to confirm expatriate employees hold legally obtained, valid visas, and that their duties align with their visa conditions. In addition, their unique online immigration tracking system helps you to easily manage and track expatriate assignees across the globe, is fully customisable and dashboard-driven, and provides a secure repository for storing assignees’ documents.
 
For more information on Xpatweb please visit:
Website:  http://www.xpatweb.com/
LinkedIn: https://www.linkedin.com/company/work-permit-south-africa/
Facebook: https://www.facebook.com/xpatweb/

Authored by: Marisa Jacobs, Director at Xpatweb

President Cyril Ramaphosa shared an optimistic lookout on the future for the Business and Government sectors within South Africa, at his State of Nation Address (SONA) on 20 June 2019.

During the address, President Ramaphosa continuously encouraged Foreign Direct Investment (FDI) confirming that they continue to build a pipeline of investment which will contribute towards economic growth and therefore job creation.

FDI = ECONOMIC GROWTH AND JOB CREATION
President Ramaphosa indicated that during the last year, R250 billion worth of investment (of the R300 billion in investments announced at the Investment Conference last year) has entered implementation phase.

It is evident from the State of Nation Address, that attracting foreign investment to boost economic growth and employment creation remains high priority on the President’s agenda.

RECOGNISING CHALLENGES
In order to improve the current business climate, our President recognises the challenges faced including the high cost of doing business, high unemployment rate of young South Africans as well as ‘complicated and lengthy regulatory processes.’

Following a recent survey conducted by Xpatweb, many businesses, including large corporates and multinationals, still perceive the visa regime (which forms part of the ‘complicated and lengthy regulatory processes’) as a prohibitor to doing business in South Africa.

Businesses continuously seek to attract foreign talent with the required skillset to positively contribute to the organisations and as such to the economy. The regulatory processes however, in their view, serve as an obstacle, despite the direct and indirect impact these critically skilled expatriate talent has on business and the ability to create jobs.

OVERCOMING THE CHALLENGES TOGETHER
President Ramaphosa assures us the necessary measures are being put in place to improve the ease of doing business, and subsequently lead to an increase in investment.

Interim solutions, such as the review of the country’s investment promotion policy and architecture, streamlining of regulatory processes, automating permit and other applications, and further reducing the cost of compliance are some of the measures mentioned during his Address.

The above changes will enable a narrowing of the gap between Government and business.

We are encouraged by the President’s remarks and retain that we have never failed to successfully obtain a legal work permit for a foreigner who truly has a scarce skill that is needed in South Africa.

ENDS 

MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za

ABOUT Xpatweb:
HOLISTIC EXPATRIATE SOLUTIONS. The Xpatweb group has been in existence for over 14 years and includes over 70 professionals, including immigration specialists, mobility practitioners, tax practitioners, attorneys, and chartered accountants. They offer holistic, client-centric, and fully compliant expatriate and work visa solutions. Clients can expect an exceptional end-to-end service that starts with an initial technical meeting to discuss any past challenges, a recommended optimal solution, and the creation of a roadmap and protocol for service delivery. They also offer an on-premises immigration audit service to confirm expatriate employees hold legally obtained, valid visas, and that their duties align with their visa conditions. In addition, their unique online immigration tracking system helps you to easily manage and track expatriate assignees across the globe, is fully customisable and dashboard-driven, and provides a secure repository for storing assignees’ documents.

For more information on Xpatweb please visit:
Website:  http://www.xpatweb.com/
LinkedIn: https://www.linkedin.com/company/work-permit-south-africa/
Facebook:https://www.facebook.com/xpatweb/

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By Thamasanqa Msiza, senior tax consultant & Darren Britz, Senior Tax Attorney at Tax Consulting SA

The South African Revenue Service (SARS) is acutely aware of the decline in tax moral and tax compliance. Many of the changes to the annual tax Filing Season this year is to lower the cost of compliance for taxpayers, but also to encourage voluntary compliance.

High-risk taxpayers, including foreigners working in South Africa, South Africans working abroad; having large capital gains, income from rental properties or from a trust are advised to engage an experienced tax practitioner to assist with filing their returns.

SARS has for the first time in several years increased the income threshold for the mandatory submission of income tax returns to R500,000 (previously R350,000) and individuals with simple tax affairs below this new threshold are not obliged to file a return.

Simple tax affairs mean the taxpayer only has one employer, does not earn additional rental or interest income, and does not have allowable additional medical aid or retirement annuity deductions.

Free capacity
The high threshold is aimed at discouraging people who do not pose a risk to the fiscus to visit SARS branches. This frees up capacity to assist taxpayers with more complex affairs who are obliged to file, and to focus on deliberate negligence or even fraud.

SARS has been making use of third party data submissions and the annual tax certificates (IRP5s) submitted by employers to prepopulate tax returns.

It also has sophisticated risk engines that will be able to detect discrepancies from information received from employers and third party data submissions such as banks and medical aid schemes. 

Last year two million people were not obliged to file tax returns because they were below the R350,000 threshold, had no additional income or expenses and only had one employer.

Yet 1.5 million of them visited the branches to file, hoping for a refund. SARS is this year focused on converting taxpayers to make use of its online channels. It has also adopted a more staggered approach to the start and finish of the tax season.

Branch filing season
Tax Season only starts on 1 August for taxpayers who have traditionally been filing at SARS branches. The deadline for branch filing is 31 October.

SARS has given the assurance that it will not show away traditional branch-filers when they come to their offices in July, but the taxpayers will be encouraged to register as users of the electronic filing system (eFiling) and the MobiApp.

The MobiApp has been revamped and will make it easier for people with simple income tax returns to file. Some of the new features include simpler navigation, the introduction of biometric authentication and the scanning and uploading of supporting documents (which has been problematic in the past).

SARS will once again make mobile units available in remote areas. It will offer free wi-fi for taxpayers at these units and in the branches to register as online-filers.

eFiling season
Filing season for taxpayers who have been making use of eFiling will start as usual on 1 July. Non-provisional taxpayers who use eFiling to submit their returns will be able to do so from 1 July and will have time until 4 December. Non-provisional taxpayers are individuals who do not have additional income such as interest and rental income.

The filing season for provisional taxpayers – people with multiple employers and different income streams – also starts on 1 July, but they will again have until the end of January 2020 to file their returns.

Be ever-ready
It is important for taxpayers to ensure that they have all their supporting documents available if they have allowable deductions and that they are able to submit it to SARS when required to do so.

It is also important to check with the tax calculation function on SARS e-filing that there are no amounts due. Where there are tax amounts due, interest or penalties will often be charged.

Your rights
Once you have submitted your return and you receive your assessment you may lodge an objection if you disagree. However, ensure you apply for a suspension of payment, as commencing a dispute with SARS does not stop the obligation to settle the amount SARS considers as due.

Also, in following the dispute resolution rules, it is best to ask SARS for reasons for the assessment before simply lodging an objection. In complex disputes it is best to engage a seasoned tax practitioner early on to avoid premature forfeiture of your claim.

ENDS

MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za

ABOUT Tax Consulting SA:
Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance.
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For more information on Tax Consulting please visit:
Website:  http://www.taxconsulting.co.za/
LinkedIn: Tax Consulting South Africa
Facebook:Tax Consulting South Africa

Authored by: Johnny Kruger, Tax Attorney at Tax Consulting SA

SARS vs Salaries
The tough economic playground in South Africa has seen struggling business owners scraping their last pennies together to keep their businesses afloat for a number of years now. Out of sheer desperation and due to stretched cash flow problems, some business owners have been faced with the decision of rather paying their employees’ salaries than paying the tax man his pound of flesh. 

“Desperate times calls for desperate measures” - a concept not receiving much empathy from SARS’ collection process. The demand for what is due to SARS will often result in closing the doors of the same businesses determined to contribute to the stagnating and struggling economy. With these businesses closing, the economy struggles further.

With Kieswetter as the new sheriff in town, one could expect a firm and aggressive stance from SARS in making up the shortfalls under the previous administration. It is only logical that he will target low hanging fruit and corporate income taxes and non-compliant businesses will be at the top of his list.

Going into a tax tailspin
One such business is that of hip-hop star, Cassper Nyovest, whose company is facing a grave encounter with SARS for owing millions in unpaid corporate income tax.

Once in this situation, companies such as Cassper’s will not only be faced with legal action but also have to face the full arsenal of SARS’ collection powers, including having their assets attached and sold under a warrant of execution to cover the amount of tax owed. Kicking the man while he is down so to speak.

As tax problems find their way of escalating if not properly dealt with, not much can be done once the SARS collection process has commenced, which often results in the suffocation of businesses.

Taking a few steps back
Business owners such as Cassper could have prevented their tax affairs from spinning out of control and ending up with SARS having to flex their collection mandate. There is no reason for business owners having endless sleepless nights, stressing about their historic non-compliance, as there are certain measures provided by the same revenue authority to rectify non-compliance before it is too late.

What Cassper should have done, is not to sit back and wait for SARS to come knocking, but rather to take proactive steps in rectifying his company’s non-compliance.

Prevention is better than cure
Some lucky businesses owners that made it through the tough economic times and risen to their feet again are in a fortunate position of settling their tax affairs before experiencing the full might of SARS.

This can be done by teaming up with a tax attorney who is well versed with the SARS voluntary disclosure programme (“VDP”). The VDP will ensure rectification of historic non-compliance and business owner that have successfully completed the VDP can benefit for remittance of up to 200% of penalties and full amnesty from criminal prosecution.
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However, it must be stressed that a VDP application is no simple task and should not be undertaken without the necessary care and skill. What effectively amounts to a mini audit, can result in a door being opened for our new Commissioner if not handled correctly.

ENDS

MEDIA CONTACT: Rosa-Mari Le Roux, 060 995 6277, rosa-mari@thatpoint.co.za, www.atthatpoint.co.za

ABOUT Tax Consulting SA:
Tax Consulting SA offers a streamlined service in the calculation and filing of individual income tax returns, provisional income tax returns or any other more complex individual tax relate matters. Our highly qualified team of Tax practitioners are registered with SARS under controlling body of the South African Institute of Tax Practitioners (SAIT). As tax specialists, we remove the burden from clients to keep their tax affairs in good order, achieving optimal tax savings while ensuring full compliance.
​
For more information on Tax Consulting please visit:
Website:  http://www.taxconsulting.co.za/
LinkedIn: Tax Consulting South Africa
Facebook:Tax Consulting South Africa