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Gaps in SA’s scarce skills supply need immediate attention

30/5/2018

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South Africa’s skills shortages in critical sectors remain an obstacle to growth. Renewed efforts to find solutions and to place skills development at the centre of the country’s development agenda are welcomed.  However, there are critical gaps which require immediate attention.
 
Search for critical skills
Marisa Jacobs, Head of Immigration and Mobility at Xpatweb, says South Africa should follow the international example: “Import the skills until you have the skills”.
 
The 2017 Critical Skills Survey, done by her firm, shows that 77% of the participants struggled to recruit “critically skilled” individuals locally, but 76% of the participants indicated that they could find the skills internationally. However, 90% found the process of recruiting internationally to be prohibiting.
 
Jacobs says this is largely a “perceived problem”. Although the process may be onerous in terms of the documentary burden and the time to process applications for work visas, it is not preventing firms from importing critical skills. 
 
In short supply  
The survey found that employers and multinational companies found it most difficult to recruit engineers (22%). However, information, communication and technology (15%), financial specialists (10%) and specialised technical skills (9%) also prove to be tough areas to find people with the right skill sets.
 
The Department of Home Affairs published a list of at least 12 sectors where the country is in need of critical skills. This include agriculture, architecture, economics, information communication and technology, engineering and health professionals. This list has remained unchanged since 2014.
 
Migration policy
Government’s 2017 White Paper on International Migration sites the lack of strategy in the current international migration policy as contributing to the skills shortage. The result is South Africa’s inability to respond to the shortage issue.
 
The paper further states that the policy is not linked to the skills development and investment priorities of the country and prevents the country from effectively competing for requisite skills in a proactive and flexible manner.
 
Jacobs notes that in times of economic growth there may be specific skills that are immediately needed. There must be flexibility in the immigration system to allow for a quicker turn-around time in acquiring these skills internationally.
 
“Once the projects are off the ground the transferring of skills become critical for sustained growth in the country,” says Jacobs.  However, the importance of importing skills until the country have the skills cannot be emphasised enough.
 
The white paper also states that the migration policy “lacks cooperative strategies for attracting and retaining international migrants with skills and capital, and a historic blindness to the retention of international students studying towards occupations that are needed by the economy”.
 
Keeping the skills
Jacobs further notes that companies in need of ICT specialists have found the skills they need in India, whilst companies in mining have been successful in attracting talent from Australia.
 
Statistics from the white paper indicate that from June 2014 to January 2016 the country issued permanent residency permits to 2,175 skilled foreigners. This represented 7% of the total permanent residency permits granted in the period.
 
This is a concern since the aim of the policy is to promote economic growth through the granting of business, critical skills, and study visas, government states in its white paper.
Jacobs says the importation and retention of critical skills does not take away job opportunities from South Africans, since these skills are not available in the country.
 
However, they help to get the economy going which will, in the absence of specialised knowledge, stagnate.
 
ENDS

MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za
 
For more information on Xpatweb please visit http://www.xpatweb.com/
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Dept of Home Affairs clamping down on illegal immigrant employment

21/5/2018

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It is now a matter of when and not if companies employing foreign nationals will be audited by the Department of Home Affairs (DHA). The arrest of at least 25 illegal foreign nationals at the beginning of May by the Cape Town Police, accompanied by officials from the Department of Home Affairs (DHA), sparked a scramble among the local business community who are concerned that they may unknowingly be employing foreigners who are working in the country illegally.

Marisa Jacobs, Immigration Specialist at Xpatweb, says that considering recent arrests that have been made, HR professionals, managers, business owners and CEOs need to make sure that systems are in place to ensure that expatriates are legally employed within their business.
 
“The Department of Home Affairs has warned that they will increasing the number of audits and investigations among South African companies that employ foreign nationals. This isn’t an empty threat and they are clamping down on foreign nationals who contravene the act as well as employers who are illegally employing foreigners. Anyone who is deemed responsible for the appointment of the person could face repercussions which means that everyone from HR managers to CEOs could face fines or imprisonment,” says Jacobs.
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Pitfall no.1: Employees job titles don’t match work visa job titles
Making sure that an employee’s job title matches the title on their work visa is a vital step to ensuring that foreigners are complying with the Act.  

“It can happen that a company employs a foreign national and that the employee is promoted within the business. When an employee changes jobs and their job title changes, their work contract no longer complies with the conditions of the visa. The process to update the visa so that it is in line with the work contract is relatively simple and straightforward, but it’s a step that many employers overlook, and this can put them at risk to non-compliance,” says Jacobs.

Pitfall no.2: Information on permits don’t match DHA system information
If a company has employed a foreign national who has been working for a different South African company, their current employer may not know if the worker’s visa is legitimate, whether it was obtained in the correct manner or even if it was issued by the DHA.

“In this case, we recommend that employers contact the DHA to check what information is on the system. This additional check beyond looking at a work permit and visa is needed to ensure compliance with the Act,” says Jacobs.

Pitfall no.3: No skills transfer plan
Another potential pitfall that companies should take note of is the condition relating to the transfer of skills. Certain categories of work visas for foreign nationals stipulate that the skill that is being imported needs to be transferred to local citizens. If a company is audited by the DHA, the company may be asked to present their skills transfer plan.

“One of the main reasons South African businesses employ foreign nationals is because we don’t have the skills, knowledge or expertise within our borders. Having a skills transfer plan in place is a great opportunity for local employees to upskill themselves and learn from foreigners so that they can cultivate the skills that are needed within their business as well as the country. Besides requesting a copy of the company’s skills transfer plan, they may also request to interview people who have been earmarked to learn from the foreign nationals,” concludes Jacobs.

ENDS
 
MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za
 
For more information on Xpatweb please visit:  http://www.xpatweb.com/

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The importance of South African Permanent Residency to your Expatriate / HR Strategy

15/5/2018

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Authored by: Marisa Jacobs, Head of Immigration and Mobility at Xpatweb
​

The work permit process can be time consuming and even painful, depending on your permit categorisation. One question often asked is whether an expatriate should consider a Permanent Residency application sooner, effectively lifting the expatriate’s status above the noise of normal work permit requirements. We found that there can be a significant upside however, depending on the complexities there may also be adverse consequences.

Since the release of the White Paper for International Migration in South Africa last year, more and more expatriates are seriously considering applying for Permanent Residency before this category is permanently removed from South African immigration law.

Why Permanent Residency?
Permanent Residency allows the holder to live and work in South Africa unlimitedly and includes the right to work without restriction, engage in business, own property, study and do all activities a citizen is permitted to do except for voting in the South African elections. You may only do the latter once you have been naturalised as a South African citizen. Permanent Residency in South Africa also allows its holder maximum flexibility with regards to entry and exit through the country’s borders.

Where an expatriate and family hold this status, they no longer need to go through the work and residency visa process and for all practical purposes this means that the employer deals with a normal South African employee.

What does the Act say?
Permanent Residency is granted to a foreigner who can meet the criteria as set out in Sections 26 and 27 of the Immigration Act of 2002, as amended, and Regulations 23 and 24 respectively.

Section 26 is applicable to foreigners who have been residing in South Africa based on their work visas for a minimum period of five years and is also applicable to spouses and dependents of South African citizens or Permanent Residency permit holders.

Section 27 is applicable to foreigners who are in possession of a permanent work offer in South Africa, have exceptional skills and qualifications, intend to establish a business in South Africa, qualify as refugees, qualify as retired persons, are financially independent, are relatives (biologically or judicially adopted) of a South African citizen or Permanent Residency permit holder or have been in a spousal relationship with a South African citizen for more than 5 years.

A word of caution
Always keep in mind any adverse tax and exchange control considerations, meaning that whilst Permanent Residency may at first glance appear like a good idea from an entry perspective, from a holistic planning perspective, it may be considered a less favourable choice. This is where holistic consideration becomes important, i.e. the fiscal aspects and tax planning must be considered as part of the service.
 
Useful Facts:
  • The status of a Permanent Resident does not affect the holder’s citizenship. The Permanent Resident can obtain a South African identity book endorsed as “non-citizen”, but not a South African passport.
 
  • In some categories or instances, certain conditions are attached to the Permanent Resident permits issued.
 
  • The Permanent Resident process takes approximately 4 – 10 months and sometimes longer.
 
  • Spending a significant amount of time outside the country can result in loss of Permanent Residency.
 
  • Traveling in and out of South Africa becomes much easier and the tedious need for extending visas becomes a thing of the past.
 
ENDS
 
MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@thatpoint.co.za, www.atthatpoint.co.za
For more information on Xpatweb please visit:  https://www.xpatweb.co.za/home/

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South African expats must go beyond understanding new law

2/5/2018

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 Author: Jonty Leon, Attorney and Financial Emigration Legal Manager
 
South African expatriates need not only understand the new expatriate tax law, but also act on it or face dire tax consequences.
 
The amendment to the South African Income Tax Act No. 58 of 1962 has been fully enacted and forms part of the Taxation Laws Amendment Bill of 2017. Despite this, many South African expatriates are under the incorrect impression that the law has not been legally amended and will thus not affect them.
 
The new law states that, “There shall be exempt from normal tax— any form of remuneration— to the extent to which that remuneration does not exceed one million Rand in respect of a year of assessment and is received by or accrues to any employee during any year of assessment by way of any salary, leave pay, wage, overtime pay, bonus, gratuity, commission, fee, emolument or allowance, including any amount referred to in paragraph (i) of the definition of gross income in section 1 or an amount referred to in section 8, 8B or 8C, in respect of services rendered outside the Republic by that employee for or on behalf of any employer, if that employee was outside the Republic.”
 
The new law, however, will only come into effect on March 1st 2020, to afford South African Expatriates the opportunity to lobby Parliament and to allow them and their employers to get their ducks in a row.
 
Is R1m enough?

The amendment will require that South African tax residents abroad will be required to pay South African tax of up to 45% of their foreign employment income, where it exceeds the R1m threshold.
 
Whilst this may seem enough, the problem is that employment income also includes allowances and fringe benefits paid to expatriates, which cannot economically be considered as “earnings”. The reality is that house, security, flights, etc. are mostly part of expatriate packages to allow the expatriate to work in the foreign location. These eat up the R1m threshold quickly, especially considering the harsh and expensive environments into which expatriates must often operate.
 
The options
There are effectively three schools of thought for expatriates, excluding those who are adopting an “ostrich, head in sand” approach:

  • There is a segment of expatriates who are starting to wrap-up their expatriate work, planning on returning to South Africa. We get an increasing number of enquiries regarding the change to legal status and strategies to be adopted to ensure that they do not compromise their previous tax- exempt status.
 
  • The financial emigration route, which is the South African Revenue Service (SARS) and South African Reserve Bank (SARB) formal process to have noted that you are no longer “ordinarily resident” in South Africa, remains the only formal route in law to permanently have a status change noted. This is also the formality which has been noted in the National Treasury Parliamentary response document, which ensures that the new R1m tax rule does not apply to a South African abroad.
 
  • There is a cautious grouping of expatriates who have a “wait and see” approach, supported by the Barry Pretorius Expatriate Petition Group that continues to engage with National Treasury on expatriate compliance to get additional relaxation of the rules. This group also follows the double tax agreement route, getting tax residency certificates, which are a way of also achieving a non-residency status.
 
Act now – protect yourself
The most compliant way to fully ensure that foreign income earned as a South African expatriate is protected from South African tax is to formalise one’s emigration through SARS and the South African Reserve Bank. 
 
This process is commonly known as Financial Emigration, and once undertaken by an expatriate, it cleanly cuts ties with South Africa from a tax perspective regarding foreign income. 
 
One of the important items noted in last year’s Parliamentary process, was the caveat against last minute changes. It was noted that someone who has been an expatriate for a long period and that emigrates just before the March 1st 2020 effective date, must expect that their actions will be viewed with the necessary suspicion.
 
The prudent and fiscally conservative position remains to always have your tax affairs with SARS fully up to date and legally compliant – this includes having the correct tax status noted on the SARS system. Tax strategy includes that the SARS auditor must see a history and consistency in compliance, thus meaning the taxpayer is determined as a low or no-risk taxpayer.

ENDS

MEDIA CONTACT: Idéle Prinsloo, 082 573 9219, idele@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/
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