Africa is a rapidly developing market with massive growth being seen across numerous sectors of business in the last few years. From the perspective of a Multinational Enterprise (“MNE”), breaking into the African market can be seen as one of the most lucrative business opportunities, with returns in a developing market being notably higher than those in existing or saturated markets. With the opportunity to increase revenue tenfold, it’s no wonder that many MNEs wish to expand their footprint across the continent.

“However, Africa’s unique regional profiles, cultural protocols and legislative diversity means that partnering with a resource-rich legal and tax expert is a key component to success,” says Jashwin Baijoo, Legal Manager, Africa Tax and Compliance at Tax Consulting South Africa.

He advises that there are certain vital traits that an MNE must insist on in their partner, to ensure their success in navigating Africa.

Extensive experience
In a continent as unique as Africa, with its rich and varied perspectives on business and diplomacy, it is essential to have the right partner. An experienced partner understands how to best navigate its divergent leadership styles, legal structures, and cultural values. To a company wanting to launch operations efficiently and successfully, this kind of insight is invaluable to its progress. Those who set-out unprepared may find themselves facing many intangible barriers to entry, which can only be overcome with the know-how that comes from experience.

Continental network
Companies coming to Africa for the first time need to establish trusted relationships with and between many different parties and agents in their target countries. Starting from scratch can result in years of lost opportunities, but an exceptional partner brings pre-existing alliances to the table. For an eager MNE, with no time to waste, it’s a requirement they cannot afford to overlook.

In-country expertise
A cross-border network is only as good as the quality of the in-country agents who anchor it in their region. A great partner doesn’t just offer high-calibre legal and tax services in their own right but has replicated their excellence at all operational touchpoints. Getting this formula right takes time, energy, and resources, which is exactly what MNEs are trying to save.

Strong leadership team
A cohesive leadership team is the driving force that pushes an expansion campaign forward. The right partner exhibits a client-first approach to strategic decision-making and assesses localised progress on that basis. Whether it’s a simple tax return for an expatriate employee, restructuring an entire payroll, incorporating a new entity in-country, or providing company secretarial services, a strong leadership team aligns their execution with their client’s desired outcomes.

Centralised command
Ultimately, MNEs moving into Africa want to achieve command-and-control as quickly as possible. And this is what the ideal legal and tax partner provides: a single point of access to a wide array of local and remote resources not otherwise immediately available to their client. That should include both advisory and technical services they can leverage to achieve their goals.

Conclusion
MNEs wishing to expand their presence across Africa do better when delegating to a legal and tax partner with a time-tested, continent-wide network of in-country experts. This ensures the MNE’s corporate strategy remains centralized, and efficiently coordinated throughout the process, saving the MNE precious time and money.

“Most importantly, through such an agent, the MNE gains total command of their expansion and that accelerates their time to launch, as well as the stability of the entire rollout,” says Baijoo.

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

Co-authored by; Bryce Nel, Project liaison officer and Jashwin Baijoo, Legal manager of Africa Tax & compliance at Tax Consulting SA

As 28 February 2021 looms near on the horizon, so too does the deadline for the second provisional tax submissions for 2021. This February will be the most important tax submission to date for expatriates earning above the  R1.25million threshold as they will now be exposed to a previously non-existent tax liability in South Africa.

Johnnie Kruger, Legal Manager for Africa Desk at Tax Consulting South Africa, says the company has been proactive in working with South African expatriates and their corporate clients affected by this change. Over the past year, Johnnie has been visiting and presenting to South Africans in remote locations in the Democratic Republic of Congo, Zambia, Oman, Qatar, Saudi Arabia, and the UAE.

"The change to section 10(1)(o)(ii) of the Income Tax Act has caused a lot of confusion for expatriates working in Africa and abroad on a rotational basis. The vast majority of expatriates are still in a dangerous state of non-compliance with the looming 2021-02 provisional tax filing season.”

Requirements to claim the exemption
Besides the new cap on income, the requirements to claim an exemption are as follows:

• An employer/employee relationship needs to be recognised by SARS;
• The expatriate must spend a minimum of 183 days working outside of South Africa;
• The expatriate must spend a minimum of 60 consecutive days working outside of South Africa; and
• The expatriate must file a tax return to disclose their foreign earnings to SARS, while claiming the S10(1)(o)(ii).

This comes as a huge blow to many expatriates who strived to meet this criteria and were previously granted the full benefit of their efforts. The introduction of the R1.25 million threshold means that expatriates need to register as provisional taxpayers if their income exceeds this amount or generate income from more than one stream. Kruger says these changes have added to the confusion among rotational workers in Africa because the process has become more complex.

“Expats working abroad will now be required to disclose their foreign income to SARS through the filing of two provisional tax returns, as well as the usual annual tax return every year. An expatriate will therefore need to fulfil three filing obligations within each tax period or face the risk of working abroad under a non-compliant status.”

Calculating the provisional tax of expatriates
With the closing of the first tax period post-amendment only weeks away, the first provisional filing should have been completed by 31 August 2020, with the payment ready to be made to SARS. Tax Consulting uses the information that clients have made available from the first six months of the year to calculate the value of this return and forecast what they believe to be a true extrapolation for the last six months.

"The second provisional tax submission is our opportunity to correct any previous inaccuracies that may have arisen from the need to forecast the entire year based on income earned in the first six months. While the process is slightly more complicated, the main issue I foresee is the large number of expats who are yet to register as provisional taxpayers, which is now urgent.”

The amendment has led many South Africans to believe that working abroad is no longer lucrative, but Kruger says there are ways to make it work.

“When it comes to tax filing, it is crucial for expatriates to hire the most knowledgeable tax consultants. The fiscal environment for expatriates continues to change. It is possible to ensure you aren’t paying more tax than you are legally obligated to pay and that you are meeting all the government's requirements.

Tax Consulting is available to assist expatriates looking to get a handle on their tax compliance for 2021,” concludes Kruger.

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