 Authored by: Lerato Mahupela, Immigration Specialist at Xpatweb
Worldwide travel restrictions are accompanied by various national strategies aimed at limiting the movement of people to prevent transmission of COVID-19. One of the global strategies has been to shutdown major port of entries, such as airports and border posts. This has left many travelling South Africans stranded in foreign countries and who are now unable to return home to their families. This is creating panic and uncertainty for travellers who cannot afford to book further accommodation or carry further living expenses in those countries. Following a Pretoria press briefing on 31 March 2020, the International Relations and Cooperation Minister Naledi Pandor said that the Department empathises with their plight and are doing whatever is within their means to assist them to be safe and to repatriate them back to South Africa. The Minister confirmed that, of the total 1 471 stranded citizens, 723 are students, 204 are workers, 224 are tourists and 320 have not disclosed their status. "I cannot say that these numbers are 100 percent accurate as it is based on people who have approached us for assistance through our missions and consular services. There may be more people in need of assistance that we do not know about yet," said Pandor. Government’s approach to assist those stranded abroad Many South Africans are experiencing difficulties in accessing documents and services in South Africa that enable them to extend their visa in the host country. This includes extension of travel insurance and other documents as may be required by the local authorities per the visa concessions made available during this lockdown period. Most South African missions have closed following the 21day lockdown announced by President Ramaphosa and officials have been working remotely to assist the repatriation process for stranded South Africans. The Minister has moved to assure family members of those stranded abroad by saying that "our missions, where possible, will continue to render consular services, including negotiating with the governments where there are lockdowns, in order to facilitate the movement of stranded South Africans." The Department will prioritise those who were most distressed – passengers stranded at airports, or running out of accommodation options, as well as the elderly and the sick. This include evacuation flights, possibly using South African Airways aircraft. For those who already purchased return air tickets to South Africa, Pandor said they should try to return back home at their own cost, by arranging with airlines they bought ticket from. She appealed to travel agents and airlines to accommodate and rebook these passengers on different dates as the airlines would now be allowed to fly to South Africa to bring back South Africans. For the rest of the South Africans who may not be stranded or distressed, they were advised to remain put to reduce movement until the end of the lockdown. Can foreign authorities abroad assist stranded South Africans? Our Missions were also tasked to also determine whether the authorities from host countries can offer any assistance to stranded South Africans due to the COVID-19 pandemic, for example by issuing extension of visas. President Ramaphosa has advised that he is working on the matter together with the Department of International Relations and Cooperation and various missions abroad. The Consular Services Unit at DIRCO Head Office is monitoring calls of stranded South Africans daily to ensure that they are informed all the time and will continue to be in touch with all South Africans until they are comfortably reunited with their families. To make it easier for people who are unable to make contact with the Missions abroad, the Department has established a 24-hour Command Centre. The Command Centre contact details are as follows; +27 12 351 1754; +27 12 351 1756, emails: Cicc1@dirco.gov.za and Cicc2@dirco.gov.za. All South Africans re-entering the country will be subject to screening and quarantining for a 14-day period. Xpatweb will continue following up on the above matters and advise as soon as we have further updates. 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 90 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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 Authored by: Jean du Toit, Tax Attorney at Tax Consulting SA
Following announcement of the actions taken by government to combat the COVID-19 crisis, many South Africans may be aware of the proposed tax measures that are effective from 1 April 2020. There is, however, an additional fiscal measure under the Value-Added Tax Act No. 89 of 1991 (“VAT Act”) that has been implemented that may have gone unnoticed. Our analysis on fiscal relief measures initially proposed, stressed the importance of bringing the VAT system into the equation, albeit in a different context. VAT relief When the Regulations under the Disaster Management Act No. 57 of 2002 were published on 25 March 2020, it effectively made provision for this exemption by providing for the definition of “essential goods”, which include: - Food - Any food product, including non -alcoholic beverages; animal food; and chemicals, packaging and ancillary products used in the production of any food product. - Cleaning and hygiene products - Toilet paper, sanitary pads, sanitary tampons, condoms; hand sanitiser, disinfectants, soap, alcohol for industrial use, household cleaning products, and personal protective equipment; and chemicals, packaging and ancillary products used in the production of these items. - Medical - Medical and hospital supplies, equipment and personal protective equipment; and chemicals, packaging and ancillary products used in the production of any of the above. - Fuel – including coal and gas. - Basic goods – including airtime and electricity. SARS announced on 27 March that items falling within this definition will fall under Item 412.11 of Schedule 1 to the VAT Act. Schedule 1 must be read with section 13(3) of the VAT Act, which provides for the exemption. There will also be a full rebate of customs duty in terms of item 412.11 of Schedule 4 of the Customs and Excise Act No. 94 of 1964. This initiative should stimulate the importation of essential goods, whilst providing much needed relief for vendors who would not be required to pay input VAT to SARS (see additional discussion on alternative VAT measures here). Word of caution With the increased demand for these goods, and with the VAT exemption on importation, business owners may be tempted to diversify their trade and capitalise. However, it is important to note that the importation of goods under this item in Schedule 1 is not unconditional. Businesses who wish to import these goods must obtain a certificate from the International Trade Administration Commission and may be subject to any further conditions agreed to by the Governments of the South Africa, Botswana, Lesotho and Swaziland. Naturally, relief measures must be implemented with haste, which means there may be some practical hurdles for taxpayers, especially in complying with any formalities. Whilst it is very difficult to avoid these issues, where there are hindrances in obtaining certificates for example, the impact of the relief is somewhat compromised. Work in progress Governments around the globe are traversing uncharted waters at a very high pace, which simply means that no one has the wisdom on the best way to survive the crisis from a fiscal perspective. The South African government appears to be paying attention when the private sector weighs in, which is an encouraging sign, as it continuously develops fiscal relief. For example, the relief package was expanded between the time the initial explanatory notes were published (29 March) to when National Treasury published the draft bills on 1 April. The Organisation for Economic Co-operation and Development (“OECD”) provides another perspective by compiling the various relief measures imposed by countries across the globe. The South African context is undoubtedly a unique one, but this is an invaluable contribution by the OECD that the government must utilise. Overall, government must be commended for the swift action it has taken in these times, even though we may encounter several kinks along the way. 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  Authored by: Jean du Toit, Tax Attorney at Tax Consulting SA
Following President Cyril Ramaphosa’s announcement of fiscal relief for certain taxpayers, in light of other measures imposed to combat the COVID-19 crisis, National Treasury published explanatory notes on 29 March 2020, which outline exactly how the tax system will be used to ease financial distress during these times. The general intent with these measures, which will take effect on 1 April 2020, is to alleviate cash flow constraints and to prevent wide-scale shedding of jobs. The question is, are these measures well considered, or will they simply postpone the inevitable? The fiscal proposals can be summarised as follows: Expansion of Employment Tax Incentive (“ETI”) - The expansion will apply for four months from 1 April to 31 July 2020. - The maximum amount claimable will be increased from R1,000 to R1,500 if the employee is still in their first 12 months of employment and from R500 to R1,000 if in the second 12 months of employment. - Allowing a monthly ETI claim of R500 for employees who are –
Deferral of PAYE - It is proposed that the payment of 20% of PAYE liability be deferred for a period of 4 months without SARS imposing administrative penalties or interest. This only applies to businesses with an annual turnover of less than R50m. - Practically, the deferred PAYE liability must be paid to SARS in equal instalments over a six-month period, which commences on 1 August, meaning the first payment must be made on 7 September 2020. - The relief is not available to employers with outstanding returns or with an outstanding tax debt, unless very specific circumstances apply. Deferral of provisional corporate income tax (“CIT”) - Deferral of a portion of the payment of the first and second provisional tax liability to SARS, without imposition of penalties and interest. - The first provisional tax payment due from 1 April 2020 to 30 September 2020 will be based on 15% of the estimated total tax liability, whereas the second provisional tax payment from 1 April 2020 to 31 March 2021 will be based on 65% of the estimated total tax liability. - The deferred payments (the balance of 35%) must be paid when making the third provisional tax payment. - The same qualifying criteria that apply to PAYE find application here. Will good intentions translate to good results? One may ask if it would be wise for an employer to create a future PAYE obligation in respect of an employee who may no longer be employed when the payment is due. Downscaling in these times is unavoidable for many employers and their tribulations may compound if they have to start making payment of deferred PAYE in September if a segment of their staff contingent is no longer with the company. Moreover, when September comes along their PAYE liability will now be even higher than it was before the measures were put in place. For some businesses, 4 months may be sufficient to recover from the crisis, but for many the effects will prevail for much longer. The additional PAYE liability from September onwards may just be the straw that breaks the business. In terms of provisional CIT payments, the fiscal relief extends over a longer period, but again in the bigger scheme, the deadline for final provisional tax payments may nonetheless come too soon to truly see certain businesses through. It is also important to note that provisional tax payments are based on estimates of taxable income. Patently, with the anticipated slow-down and the concomitant reduction in revenue, estimated taxable income in the short term will be reduced considerably, which may yield marginal results from a relief perspective. Potential alternatives Perhaps, government should have taken a leaf from the tax measures imposed by the UK, where the VAT system was brought into the equation. Many small business owners will attest to the fact that their companies went under because of the way our VAT system operates. In most cases, VAT vendors have to account for supplies upon issuance of an invoice, as opposed to the date of receipt of payment. This simply means they have to keep paying VAT over to SARS, even if their invoices have not been paid. The suffocating effect of this phenomenon will be more acute in the coming months and a less distortive intervention would perhaps be to allow small business owners to operate on payment basis until we see things change. A further measure that could be implemented is to permit deductions in respect of contributions made to the Solidarity Fund, which was established specifically to help combat the virus and the effects thereof. Such an initiative would benefit the taxpayer and the country as a whole. Final remarks Given the short amount of time government has to implement fiscal relief and with prevailing budget constraints, this must have been a very difficult task. But it is short sighted to think that small businesses simply need 4 months of relief to ride out the storm. The current fiscal proposals may be sufficient for some businesses, but it may simply delay the inevitable for many others. 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  Auhtored by: Moeketsi Seboko, Immigration specialist at Xpatweb
On 30 March 2020, President Cyril Ramaphosa once again addressed the nation regarding the COVID-19 pandemic and provided an update on the country-wide “lockdown”. He delivered a clear and concise message showing a deep understanding and care for the current plight of the nation. However, it is clear that he is a visibly strained man as South Africa and the rest of the world remain under siege from this invisible enemy. The first quarter of 2020 has been an equally challenging experience for business and social lifespan globally, South African is no exception. "As the country went into lockdown, we received the news that the rating agency Moody's had downgraded South Africa to a sub-investment grade. This will significantly increase the cost of borrowing to fund government spending and will have a negative impact on the economy," Ramaphosa said. These are trying times for our nation. The impact on business, mobility and scarce skills in South Africa Since the declaration of the state of disaster, we have witnessed a swift and coordinated issuance of directives by relevant and respective national departments. Amongst some of the noticeable directives issued, was the travel ban imposed by both the Department of Transport and Home Affairs to countries which have been declared “medium-to-high” risk by the World Health Organisation. Most of South African missions and embassies abroad are closed as a result and those that remain open do not provide immigration services. At this stage and understandably so, it’s not yet clear how time lost will be compensated and how embassies will be capacitated to process large volume of visa applications once the lockdown is lifted These directives have put an unavoidable strain on economic activities. Most business operations are being suspended, save for essential services which was spared, while international mobility and immigration are being adversely affected. To put things into perspective, our IT industry is largely dependent and supported by the foreign skills and resources from countries such as India and China. These individuals are no longer able to work on projects in South Africa and as such we are seeing many projects placed on hold indefinitely. This negatively impacts the economy and places businesses skill transfer plans in jeopardy. In addition, South Africans who were being sent to work on projects abroad to gain new skills that are considered scarce are also left in limbo. The far-reaching effect and consequence of the above on our economy is yet to be fully experienced. An uncertain future for global mobility Until WHO declares medium-to-high risk countries safe again and removes restrictions on travelling in general, global mobility and immigration will remain suspended and business will suffer. Companies reliant on international mobility will feel the pinch and may never fully recover after the pandemic has been defeated. Large corporates have thus far reviewed their international mobility policies in line with government control measures and directives. However, it is uncertain how long they will be able function without internationally mobile resources. Many foreign nationals who could not escape the lockdown have found themselves trapped in the country. Same can also be said about South Africans living abroad. Such are the times that there is even a growing Facebook group aimed at providing support for those stranded in South Africa and abroad. It is imperative that foreign nationals who are still in the country and need to travel back home should contact their respective embassies to inquire if there are arrangements by their government to repatriate them back home. At this stage, only one country (Germany) has made arrangements with our government to evacuate its citizens. This was announced by Transport Minister Fikile Mbalula on 27 March 2020. Concluding remarks We continue to encourage visa holders residing in South Africa to prepare for the renewal of their existing visas in order to remain compliant and/or re-gain compliance where a visa has already expired. For foreign nationals abroad, this is the opportune time to start the application process by ensuring that all requirements are complied with to enable you to submit your visa applications as soon as the lockdown restrictions have been uplifted. The normal processing time by the Department of Home Affairs (DHA) is 4 – 8 weeks, however we anticipate that the DHA will receive an influx of applications once the travel bans are uplifted and a proactive approach will ensure you are ahead of the “queue”. As President Ramaphosa said, “If we work together, if we keep to the path, we know we have to take, we will beat this disease. I have no doubt that we shall overcome”. Whilst we come into terms with the effect of Covid-19, we should heed the President’s call to not lose hope and use this time to reflect on how we, as South Africans, can unite and support Government in the fight against the COVID-19 outbreak in a combined effort to “flatten the curve”. 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 90 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/  The Department of Home Affairs has made some concessions to foreign nationals in South Africa whose visas are about to expire and where travelling to their home countries is not an option.
The department issued a directive that allows for the extension of all Chinese nationals in SA whose visas are about to expire to remain in the country until 31 July. The department this week issued a further directive which covers foreign nationals from all medium and high-risk countries, allowing them to extend their visas until 31 July. This is also applicable to foreign nationals who will have to travel through a high-risk country to their country of origin. Marisa Jacobs, director at Xpatweb and head of immigration and mobility, encourages foreign nationals to apply for the extension or renewal of their visas to remain compliant. “Do not use the coronavirus as an excuse not to take the necessary measures to remain compliant. There are concessions – make use of them.” She says their client base is largely multinational companies with foreigners working in SA. This include critically skilled or executive level individuals as well as technical project-related foreign nationals. They have been concerned about their position should their visas expire. “They would normally have travelled back to their home countries, but with the ever-increasing travel bans this is not an option at this stage.” Jacobs says there are also several instances where companies have resources that are due to enter SA to start on projects or assignments. “Many are not able to enter the country anymore due to the travel bans, or they are no longer able to obtain a visa.” Several embassies where visa applications for entry into SA have been pending, have in recent days sent out notices that they will be closing their offices and they will no longer process applications. People have been asked to collect their passports. The situation is completely fluid at the moment. An embassy that is open today, can be closed tomorrow, she says. Xpatweb has received notices from embassies in the UK, Canada, Qatar and Sweden indicating that they will no longer process visa applications. However, the embassy in China has remained open. “We are advising people who are due to travel to SA to submit their applications as soon as possible if their embassies remain open and they are processing applications,” says Jacobs. In practice not all travel can be avoided. Jacobs says they have found the Department of Home Affairs to be quite sympathetic and has been willing to make exceptions when it is critical for people to travel to SA. Jacobs advises people who has to travel urgently to ensure their flight bookings and accommodation are open-ended or changeable. “We foresee more restrictions in the coming weeks from everywhere. People need to be pro-active, and although most people will restrict their travel as far as possible there will be instances where travelling cannot be avoided.” People who have travelled and are stuck because of travel restrictions should contact their embassies. The department of home affairs has been extremely helpful with information and their efforts to accommodate people, says Jacobs. 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 90 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, Managing Director at Xpatweb
The announcement by President Cyril Ramaphosa on 16 March 2020 regarding the evolving COVID-19 epidemic and emergency measures, has left many employers uncertain on the status of their expatriate employees and what should be done during the period of ‘lockdown’. Read with subsequent announcements by DIRCO and guidance from the Department of Home Affairs and other stakeholders; we are indeed in unchartered territory, where everyone has little choice but to work together, keeping South Africa safe whilst minimising the potential devastating impact on the economy. The President emphasised in his Address that “Never before in the history of our Democracy have we been confronted by such a severe situation”. Many expatriates and their employers are not spared by the complexities. WHY EXPATRIATES ARE IMPORTANT? The employment of expatriates in South Africa, can generally be classed into various work visa categories. These categories have in common that they are there to support and strengthen South Africa as a business and investment destination, strengthen critical skills in South Africa and otherwise allow employers to make business important appointments where the required resource is not available to South Africa. These employees are mostly a critical cog in the wheel of their employer, which becomes especially important in times of complete economic uncertainty. We note below some practical questions and answers for foreign nationals on work visas and their employers – A) VISA EXPIRES OF EXPATRIATES FROM ‘HIGH RISK’ COUNTRIES CURRENTLY IN SOUTH AFRICA Expatriates from “high risk” countries currently in South Africa, and whose visas are due to expire, are advised to apply for the extensions of their visas, within South Africa to ensure that they remain compliant. Certain of these renewals, such as inter-company work visa renewals, corporate visa holders and those on short terms business visas; are normally not allowed in South Africa; but these are extraordinary times. Travel to their home countries will mean they will not be allowed to come back to South Africa, as the foreign South African missions in these “high risk” countries are prohibited from issuing visas. This is a special process and must be done through the correct Home Affairs channels, and we recommend that employers start this process as soon as possible. B) VISA EXPIRES OF EXPATRIATES FROM ‘MEDIUM RISK’ COUNTRIES CURRENTLY IN SOUTH AFRICA Expatriates from “medium risk” countries currently in South Africa, and whose visas are due to expire, are equally advised to renew within South Africa. Whilst the foreign South African missions are allowed to process these applications, there is the requirement of a “certificate of clearance from the virus”, which may cause delay. Also, the employer and expatriate run the risk that medium risk countries may be escalated to high risk. Again, we recommend that the Department of Home Affairs should be approached upfront for special dispensation. C) PASSPORT EXPIRES OF EXPATRIATES FROM A ‘RESTRICTED’ COUNTRY Any passports that have expired or are due to expire, may be renewed at the appropriate Consulate or Embassy within South Africa, and visas currently endorsed into an expired or full passport, will require an application for a ‘transfer of visa’ to be made in order for the visa to be endorsed into the new passport once issued. This can be done in South Africa. Expatriates are reminded to ensure that they apply for passport renewals timeously as any subsequent visa validity will be subjected thereto. D) NEW WORK VISA ACQUIRED BUT EXPATRIATE HAS NOT ENTERED SOUTH AFRICA Any foreign national who has visited high-risk countries in the past 20 days will be denied entry into SA; and travellers from medium-risk countries will be required to undergo “high intensity screening” before entering SA. Foreign nationals from both “medium and high risk” countries who used to enter South Africa visa free, will now be required to apply for a visa to be considered entry to South Africa; this application will require inclusion of a health indication with a “certificate of clearance from the virus”. Contradicting to the above, and subject to further clarification from the Department, work visas that have been issued from these countries, exclusive of China and Iran, and not yet activated through ports of entry, have not been revoked or cancelled. However, these nationals remain banned from South Africa until same has been lifted. We recommend that an upfront confirmation process be adopted with the Department of Home Affairs or relevant Foreign Mission, as opposed to ‘fingers crossed’ that entry will be allowed. E) EXPATRIATE ON HOME LEAVE, IN A ‘MEDIUM AND HIGH RISK’ COUNTRY The Minister of the Department of Home Affairs indicated that flights are subject to an “advanced passenger process” whereby a passenger log of each flight is submitted to the Department and undergoes a verification process between the travel origin and connecting flights for each passenger coming to South Africa. This will undergo further review before disembarkation into South Africa to assess if any passengers may not be permitted to enter South Africa. We recommend contact is made prior to making travel arrangements to ensure entry into the country will be allowed. Employers and expatriates should take special note hereof and make sure that they get clearance upfront, thus not risk being stranded in a system, currently in a state of flux. F) ABOUT TO START THE PROCESS OF NEW VISA OF WORK VISA Where new resources are required for business and/or for projects purposes, it is recommended that the expatriate, supported by the South African employer, still immediately proceed with the preparation (and filing where possible) of the required work visa application(s) until further instructions have been received by the Department of Home Affairs. Know one knows how long these measures will apply and with less travel visas issued; this is an opportune time to start the process. Albeit restrictions have been imposed on the travel of foreign nationals from “medium and high risk” countries; the actual filing of visa applications have not been impacted in all countries. Understandably, as the economic impact of these restrictions must be limited, so it makes sense to use this period to get necessary approvals now. This prevents being caught in an expected rush later when restrictions are lifted and allows business to get back to normal as soon as restrictions are over. G) UK IS NOW CLOSED, CHINA REMAINS OPEN The VFS office in the United Kingdom is now formally closed, however, China remains open for applications. Where sufficient business or personal case exist, employers and expatriates caught by these closures, often immediate and unexpected, can always approach the Department of Home Affairs directly through the correct channels. There is also always a discretion of the South African Embassy, and until clear instructions have been received by them from the Department. Where applications are being processed, applicants will be in a position to make the required arrangements in order to proceed with travel to South Africa as soon as the travel bans have been uplifted. Again, it is therefore imperative that applications are not delayed but filed (where permitted) as soon as possible as we expect an influx of applications once the travel bans are uplifted and some advance planning will ensure you are ahead of the rush. We will continue to make updates available and assist with any individual or specific request where same may be required. 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 90 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
The Coronavirus outbreak has impacted many foreign nationals finding themselves at the end of the validity of their Intra Company Transfer Work Visas or Short-Term Visas and in need to travel back to their home country to apply for new visas to extend their stay. In response to growing reports about the severity of the virus, The Department of Home Affairs (DHA) in February issued a Directive for Chinese Nationals allowing them to renew their visas in SA in the short term. Since the issuance of the directive, more countries have become affected and which has consequently resulted in increasing travel restrictions; as we are now at ‘Global Pandemic’ level. Consistent with this Directive, we would not be surprised if the DHA extends this temporary concession to cover all Eastern countries in line with the Directive issued for Chinese nationals. The current Directive accordingly permits Chinese nationals who are still within South Africa, to extend their stay on a short-term temporary basis until 31 July 2020. This Directive further includes the following qualifying criteria -
Whilst there are many foreign nationals and employers who hold the view that a work visa process is a daunting process, this is simply not true. The problem cases are mostly attributable to the incorrect process being followed, protocols not observed and in isolated cases certain Department of International Relations staff, who are not correctly following the process. These perceived obstacles are easily overcome with a properly motivated business case and following the correct channels. The DHA holds wide discretionary powers to serve the interests of all South Africans, and with the imperative of keeping South Africa safe and protecting foreign investments; this quick ‘thinking on their feet’ shows that South Africa becoming more investor friendly, a move we applaud. Click here to view the current Directive applicable to Chinese nationals. 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 90 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: Jean du Toit, Senior Tax Attorney at Tax Consulting SA
At the 2019 Tax Indaba, the Commissioner for SARS declared that non-compliant taxpayers will no longer be allowed to operate unchecked and can expect to face criminal prosecution. At the time, some may have scoffed at the Commissioner’s promise, but recent developments may force his detractors to re-evaluate the situation. There is, however, a question on whether the current strategy is the correct one and will start getting taxpayers to regain a respectful fear for SARS; which is really the sweeping change we need. SARS’ recent victory parade Since the Tax Indaba, we have seen SARS score several victories, but SARS’ media page over past month in particular paints the picture of a revenue authority that should not be tested -21 February 2020 – The Cape High Court sentenced two taxpayers to 16 years and 17 years direct imprisonment respectively for defrauding the tax system. SARS also opened a case against the SARS official who allegedly assisted them to have fraudulent VAT refunds authorised and paid out. -28 February 2020 – the Constitutional Court dismisses Gary Van der Merwe’s leave to appeal an eviction order in a 10-year legal battle with SARS, which effectively means the property can now be sold to recover Mr Van der Merwe’s outstanding tax debts. In the same media statement SARS noted that more than 80 individuals have been sentenced to imprisonment for VAT fraud. -1 March 2020 – the Supreme Court of Appeal dismissed Mark Lifman’s appeal to stop SARS from seizing his assets in settlement of a tax debt amounting to R352-million. -Amidst SARS’ victory parade, the Commissioner released a specific warning on 27 February 2020 that firm action awaits transgressors, encouraging taxpayers to come clean: “we want to remind taxpayers and traders to talk to SARS, before we come to talk to you.” The Commissioner, in our opinion correctly, also started talking about comparing the housing register with people declaring rental income, as well as looking at employer’s not paying over PAYE to SARS; leaving their employees deeply exposed to the taxman and impeding one of SARS’ highest and most efficient collection mechanisms. Will these latest media reports jolt taxpayers into taking SARS seriously, resulting in a flurry of Voluntary Disclosure (VDP) applications? Smoke and mirrors SARS’ overall objective is quite obvious; it wants to galvanise voluntary compliance across the tax base by making examples of delinquents, thereby striking fear into the hearts of taxpayers. Truth is however, SARS may have embellished their recent wins if we consider the following – -The protracted legal battles with Mark Lifman and Gary Van Der Merwe commenced long before the Commissioner’s tenure. -The arrests pertaining to VAT fraud must be distinguished from other cases. These cases normally involve falsified documents and are simpler to uncover and prosecute. It takes a more sophisticated craft to unravel and prove the fraudulent elements of more sophisticated tax schemes. -The case against the implicated SARS official appears to have been put off, with a case only being opened now. There may be several reasons for this, but corrupt SARS officials is a more serious threat than non-compliant taxpayers and must be seen to be dealt with as a priority. -It is important to pursue the big names when it comes to tax dodgers, but they represent a small part of SARS’ problem, which is the fact that taxpayer morality amongst ordinary taxpayers is at a low point. Where should SARS aim its crosshairs? SARS’ strategy is a good one, but there is an argument to be made that it is directed at the wrong segment of the tax base. SARS is not losing out on a lot of revenue from the Mark Lifman’s of this world. Returning to the topic of employers not paying over PAYE, SARS is losing out on collections from the mere mortals, those taxpayers who perhaps used to be compliant, but as SARS lost its deterrence factor, they found it too easy not to pay their taxes. Perhaps a leaf can be taken from New York's crime reduction through "get-tough" policies; the aggressive policing of lower-level crimes. Dubbed the "broken windows" approach to law enforcement, small disorders lead to larger ones and perhaps even to serious crimes. The then mayor of New York, Rudolph Guiliani told the press in 1998, "Obviously murder and graffiti are two vastly different crimes. But they are part of the same continuum, and a climate that tolerates one is more likely to tolerate the other." SARS needs to make examples of this segment specifically; it should go after companies, directors and public officers who fail to pay over PAYE. In the same vein, taxpayers who do not declare rental income or who use offshore trust structures to evade taxes must be seen to receive similar sentences to the ones SARS boasted about in the media. There are no published cases of Panama Papers, Common Reporting Standards or those implicated in State Capture or other commissions of inquiry. Prosecution of notorious delinquents is not relatable for the man on the street; we need a message that says no one will be spared, one that hits home. When this message carries through, we will see taxpayers taking up the Commissioner on his invitation to come clean. 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  Authored by: Reabetswe Moloi, Attorney at Financial Emigration
South African seafarers and yacht crew are of the view that they automatically qualify for the exemption of their foreign employment income earned for their services rendered aboard a ship or yacht. However, it is important for seafarers and yacht crew to know and understand that they need to fulfil certain requirements in order for them to claim the “seafarers” exemption in terms of the Income Tax Act. Running a tight ship Section 10(1)(o)(i)(aa) provides for the exemption of the full remuneration earned by an officer or crew member employed on a ship. The following requirements would need to be met should such officer or crew member wish to enjoy the benefits of the exemption:
Learn the ropes Where an officer or crew member is employed aboard a private yacht and where there are no paying passengers, such person would not be able to claim the exemption in terms of section 10(1)(o)(i)(aa). For example, some crew members or officers will find themselves working on a superyacht and the passengers on the yacht are not paying for their transportation. In this instance such crew member or officer would not be able to claim the exemption in terms of section 10(1)(o)(i)(aa). Furthermore, it is important that the ship is transporting goods or passengers for reward outside of South Africa. Therefore, the exemption cannot be claimed by the crew member or officer aboard a ship that is merely docked or travelling within South African territorial waters, even if it is transporting goods or passengers for reward. Don’t be caught between the devil and the deep blue sea As a taxpayer, you hold the burden of proof to show that you qualify to take advantage of the exemption. It is therefore imperative that an employment agreement is in place, which clearly shows the duties and position that you hold as a seafarer. This will ensure that all doubt regarding qualifying to make use of the exemption is waived and you don’t find yourself having to scrummage for information needed to prove that you have met the relevant requirements. Conclusions and final overview Seafarers should therefore be familiar with the exemptions available to them and understand the requirements needed to meet such exemptions. They should also be familiar with and fully understand the manner in which their yacht/ship operates. Should all else fail, an officer or crew member that has not met any of the abovementioned requirements for the seafarer’s exemption are still able to make use of the section 10(1)(o)(ii) foreign employment income exemption, provided they meet the requirements thereof. However, as of 1 March 2020, the foreign employment income exemption will be limited to an exemption of R1 million per year of assessment and they would not be able to have their full foreign exempted as with the seafarer’s exemptions. 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  Authored by: Jonty Leon, Legal Manager at Financial Emigration
South Africa Bleeding Skills Not surprisingly, there has been an outflow of South Africans in recent years for various reasons, a top reason being the punitive “expat tax” regime promulgated in December 2017, and effective 1 March 2020. Financial emigration being the main process being used to avoid this tax, as it placed one formally on SARS and SARB record with non-residency status. There were many tax professionals who claimed that emigration through SARB had no bearing on a person’s tax status, but the Budget 2020 announcement has now conclusively confirmed this view as incorrect. As the emigrant is getting from SARS a ‘Tax Clearance Certificate – Emigration”, in practice this is pretty much a conclusive factor that you are non-tax resident, provided the application was truthful and not just to evade taxes. Budget Announcement – Some Surprises The Budget Announcement had some surprising announcements on SARB Emigration, making three main points – ‘We want to encourage South Africans abroad to keep their ties with the country’ What exactly is meant with encouraging South Africans abroad to keep their ties with the country, is not clarified. Having ‘ties’ with South Africa is a factor to be considered in whether you are tax resident in South Africa, thus having to declare world-wide income and pay taxes in South Africa. Thus, if having ties means risking to pay tax in South Africa on word-wide income, capital gains, estate duty etc., the more-savvy expatriates may choose to kindly decline this gesture of friendship. ‘We will raise the exempt amount for foreign remuneration to R1.25million’ This announcement was a surprise to many, but not perhaps taken the weakness in the Rand. In Dollar terms, when the law was announced 18 December 2017 the ZAR / USD was R13,10, thus effectively USD76,336 per annum was exempt. On announcement of the new R1.25m at a conversion rate of R15,26, gives you USD81,913 exempt, thus an effective 7% relief over two to three years, depending on the measure applied. The more the ZAR weakens, the more the exemption is eroded. One can only hope that the ZAR will strengthen in the next 12 months – unlikely. ‘We will phase out the administratively burdensome process of emigration through the South African Reserve Bank’ This is a welcome change as the process is indeed administratively burdensome. However, this change is not immediate and remains the law until the new regime is implemented on 1 March 2021. What this new process will look like are very uncertain, albeit scant details are shared in the Budget Announcement – “Following reforms to the income tax treatment of South African tax residents who receive remuneration outside the country, the government proposes to remove the exchange control treatment for individuals, while strengthening the tax treatment” (emphasis added) Contrary to some commentary shot from the hip; whilst it is true that the SARB process will be repealed, there will be ‘strengthening [of] the tax treatment’; we expect a revenue hungry and collection driven SARS to become much more strict on South Africans abroad. The announcement notes that there will be a –“more stringent verification process … also a risk management test that will include certification of tax status and the source of funds”. What exactly all of this means is unclear, but a more stringent verification process, risk management test and ‘certification of tax status’; will probably not be a walk in the park which some commentators suggest. Anyone who has dealt with SARS VAT refunds will know that once you are on the radar from a risk management perspective, you must be prepared for multiple requests and a thorough examination. Government Taking Expatriates More Seriously There appears to be at least some concerted effort on the part of the South African fiscus to speak to South Africans working abroad. The well-respected National Treasury Chief Director of Economic Tax Analysis, was quoted in the media after the Budget 2020 announcement in an article “You will never have to emigrate financially from South Africa – The Budget reveals you will now enjoy a higher foreign income exemption”. The article is accurate in many regards, but there are some tax technical aspects which seem to have immediately caused confusion amongst the expatriate community -‘Financial emigrants also faced capital gains tax as they were deemed to have sold all their assets in SA and had to make difficult choices about withdrawing their retirement savings and incurring/ the high taxes that come with making withdrawals. Typically, they have needed advice from advisers charging large amounts for this specialist advice, Axelson says.’ This statement refers to the capital gains tax deemed disposal rule when becoming non-resident; it applies to both when you financially emigrate, claim Double Tax Treaty non-residency or claim to be non-resident for whatsoever reason. Thus, anyone who wants to not be caught by the expatriate tax must pay any CGT exit charge, as part and parcel of becoming non-resident. The statement is [double] incorrect that the capital gains tax exit charge applies to “all their assets in SA”. In tax law, many assets are not caught by this charge including South African fixed property, private assets, vehicles, cash etc. Also, as a South African resident who becomes non-resident, your world-wide assets are deemed disposed under this tax rule, not only assets in South Africa. Axelson says some South Africans working abroad have failed to tell the South African Revenue Service that their tax residency has changed. If they tell SARS now, they will owe tax in South African on their worldwide assets. Some are therefore trying to backdate financial emigration through the Reserve Bank, but this will have capital gains tax implications and possible penalties even if financial emigration is scrapped from next year, he says. This statement would be correct in many instances, but perhaps misleading for a South African who has left many years ago with permanent intention that South Africa is not their real or main home. Where the taxpayer has failed to comply with SARS and SARB formalities; and now proactively and voluntarily corrects their tax status; this should be applauded. It would be incorrect to say your intention to emigrate is today, when in truth your intention (which you can objectively evidence, as the onus of proof is on the taxpayer) was to leave, say, five years ago. The truth must be disclosed today and there can be no penalties imposed where you follow the correct SARS Voluntary Disclosure Program (“VDP”). Take-Home This announcement around abolishing SARB emigration, in many ways, echoes the massive South African policy shifts to abolish private medical aid and implement expropriation without compensation. The announcement is made, but there is no concrete solution tabled which gives South Africans, who have the means to seek greener pastures, some degree of comfort. As it stands, government is now on record that the projected revenue collection will be R63,3bn short. The taxes on South Africans working abroad is clearly high on the agenda and perhaps one would be forgiven to be skeptic towards those who advocate that this level of government attention is helping expatriates to escape the tax net. As the saying goes, better the devil you know; this means South African emigrants are now on notice that they have 1 year for ‘financial emigration’; where after an uncertain new “more stringent verification” process, awaits. 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 |
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