Authored by: Jean du Toit, Senior Tax Attorney at Tax Consulting SA
For some time now, there has been murmurs of a tax revolt amongst South African taxpayers.

​For too many reasons to mention, South African taxpayers, sometimes publicly, contemplate the notion of disregarding their tax obligations.

The SARS Commissioner has taken note of the pervasive disillusionment amongst taxpayers and noted his concern at this year’s Tax Indaba. The reality is that, while Ms Zille and the rest of us ponder the feasibility of a tax revolt, it is already too late to close the stable door.
 
Is a tax revolt legal?
In the average person’s reverie, a tax revolt is a situation where taxpayers in an act of solidarity resolve to abstain from their civic duty of paying their taxes.
 
This may be in protest against tax policy, where taxpayers as a collective perceive the tax(es) to which they are subjected as being unjust.
 
A notorious example of an ongoing tax revolt in this regard is E-tolls, one which objectively speaking is quite successful.
 
A tax revolt may also be occasioned where taxpayers do not agree with the manner in which the government chooses to “spend” the portion of their earnings they had to part with, which is likely more applicable in the present context.
 
Under a tax revolt, one may broadly identify two types of taxpayers; those who simply do not and never have paid taxes, perhaps out of disdain for the very concept thereof and those who, from some misguided sense of virtue, feel justified in discontinuing their tax obligations.
 
In the latter case, the taxpayer somehow legitimises their behaviour, often because they do not think they have to contribute to a leaky bucket, or they feel they have already contributed more than their fair share.
 
These motives may also be a veneer for the actual reason for adopting a non-compliant lifestyle, which is that the taxpayer lost their fear of prosecution. It is the constituency of the latter two groups that is growing in our country.
 
In any event, no matter how you cut it, these types of tax revolts are illegal and cannot be rationalised.
 
Legal tax revolts
There is a second type of tax revolt, a less unscrupulous kind, where taxpayers deprive the tax man of revenue by using legal means.
 
On a small scale, this may be achieved by consuming zero-rated goods only, or by kicking your smoking habit and adopting a teetotal lifestyle, thereby depriving the state of VAT and sin taxes.
 
A more drastic and far more effective, yet legal, act of defiance would be to cease your tax residency, in which case SARS would no longer have a claim to your worldwide income and capital gains.
 
Arguably, it is this manifestation of a tax revolt that is currently most prevalent and the one giving SARS heart palpitations.
 
The exodus from the SA tax net
With the surge of reports on corruption, together with the dismal economic outlook, the omnipresent threat of a downgrade and the unstable political climate in our country, many South Africans choose to leave the country permanently in search of greener pastures.
 
Leaving the country for these reasons, however, does not constitute a tax revolt per se, even if SARS’ recent ineptitude may have been one of the driving factors in these individuals giving up on South Africa.
 
The tax revolt we are speaking of is the one that has its genesis in the amendment to section 10(1)(o)(ii) of the Income Tax Act (colloquially referred to as “the expat exemption”).
 
The expat landscape changed when this amendment was promulgated, which means that from 1 March 2020 expats would be liable for tax in South Africa on their foreign employment income insofar as it exceeds R1 million.
 
National Treasury and SARS forged ahead with the amendment, despite being forewarned of the possible consequences.
 
This forced the hand of many expats (we can attest to this from our tax practice), who have now decided to cease their tax residency specifically to avoid being caught by the amendment.
 
What does this mean for SARS?
It must be understood that, whilst the largest contributor to national revenue is personal income taxes, there is a comparatively small number of taxpayers in this segment who bear most of this burden.
 
The taxpayers who seem to be leaving our shores are some of those relatively high earners on whom SARS rely quite heavily. These taxpayers are now lost to the fiscus forever and it may appear that National Treasury and SARS’ myopic policy formulation would amount to an own goal.
 
What does this mean for taxpayers?
For those of us who have chosen to go down with the ship, so to speak, it means that SARS will have to scratch harder to extract taxes from the individuals who remain.
 
With the prevailing budget shortfall, taxpayers can expect increased aggression from SARS when it collects taxes this season.
 
Moreover, to entice some of those taxpayers who have lost their fear of prosecution to rejoin the tax base, SARS has promised that non-compliance will be met with criminal sanction. In short, some taxpayers may face a torrid tax season this year and it may be wise to partner with an attorney who knows how to go toe-to-toe with SARS, to help them brave the storm.
 
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, Senior Tax Attorney at Tax Consulting SA

SARS Commissioner, Edward Kieswetter, has used the South African Institute of Tax Professionals’ Tax Indaba as a platform to fire a shot across the bow, letting taxpayers know that non-compliance will be met with the full force of the National Prosecuting Authority (NPA).

The Commissioner has allied himself with the NPA and concluded a new accord in terms of which it seeks the prosecution of a long and growing list of at least 1177 non-compliant taxpayers.

Desperate and dangerous
Taxpayers must take this statement very seriously.

It must be understood that, at the moment, SARS is fighting a war on all fronts – on the account of the Commissioner himself, it is facing an internal battle to clean up the devastation left by the previous tenures, whilst, at the same time, trying to make good on a massive budget deficit and hoping to eradicate a widespread slippage in taxpayer morality.

Times are desperate and SARS has no choice but to proceed on a no-tolerance basis.

Enforcement is key
At the height of its potency, when SARS was one of the most revered revenue authorities across the globe, it operated on three legs, a model developed in SARS’ early years of existence by the then Commissioner for SARS, Pravin Gordhan.

One of these indispensable legs was enforcement, which, seemingly, Mr Kieswetter is intent on reviving.

The Commissioner’s approach is encouraging, as we agree that a compliant tax base is very much key in SARS’ renaissance and the fear of criminal prosecution is certainly an effective mechanism in getting compliance back to where it should be.

SARS’ war chest
For those who may still want to take their chances, it is perhaps important to be alive to the fact that the infrastructure and machinery to effectively prosecute taxpayers are already in place, albeit, in recent times, we have not seen it being used as often as it should be.

However, when SARS chooses to wield its arsenal, it can be devastating.

Those who believe that criminal prosecution is reserved for taxpayers who are involved with high-end tax evasion or the elicit tobacco trade should revisit their convictions.

The Tax Administration Act No. 28 of 2011 (TAA) criminalises a wide array of acts of non-compliance, ranging from seemingly “petty” transgressions such as the failure to file a return or to retain documents, to more serious acts of tax evasion.

Taxpayers must also be cognisant that where they are to any degree implicit in the non-compliance of another taxpayer, they may also face criminal prosecution.

This includes failure to withhold PAYE or instances where a person is involved in a company’s non-compliance.

The TAA does not spare negligent or lax taxpayer’s either, as intent is not always a requirement to fall foul of the criminal offences list.

For example, a person may have started a company and simply never bothered with its compliance, in which case he or she may be prosecuted under the TAA, as well as the Companies Act No. 71 of 2008. A taxpayer’s ignorance can easily result in the NPA, at the behest of SARS, knocking at their door.

Do not tempt fate – it is not too late
The good news is that SARS encourages taxpayers to confess their sins and the TAA makes express provision for such instances in the form of the Voluntary Disclosure Programme (VDP).

The VDP gives amnesty from criminal prosecution, in addition to substantial relief from penalties.

Taxpayers would do well to heed the Commissioner’s warning shot; do not be the one in the orange uniform who galvanises compliance in others.

The key here is “first mover advantage”, as you are legally prohibited from claiming VDP where a tax audit has commenced.

What we would not like to see
The last time SARS started an initiative similar to this, it pursued the softest of targets, such as a celebrity soap star who did not submit a tax return and a small trader in Port Shepstone who failed to submit his VAT returns.

A couple of admission of guilt fines later, and SARS claimed bragging rights.

Whilst everyone should be treated as equal before the law, this probably did not have tax fraudsters quaking in their boots; likely quite the opposite.

Prosecuting with courage
If SARS wants the tax base to know that it means business this time, it should consider the following 

• To date, taxpayers have seen little bang for their buck from the various Commissions of Enquiry. The corrupt do not have the proclivity to pay tax on money in brown envelopes, so we hope, for a change, they will be high on SARS’ hit list.

• The whole of South Africa wonders how we could have such massive budget deficit if the Guptas paid their Capital Gains Tax exit charges under section 9H of the Income Tax Act when they emigrated. If they have not paid their dues upon their departure, their names should be first on the list.

• The ex-KPMG partner Jacques Wessels pleaded guilty and was subsequently struck off the roll of auditors by IRBA for six charges of misconduct that, according to IRBA, resulted in a loss to SARS of more than R2 million in tax revenue. Patently, there is a prima facie case of tax evasion that needs answering and it is perhaps possible that other parties were also complicit in assisting the Gupta-linked firms to perpetrate this offence. Thus far there is no indication that SARS is doing its own investigation into this matter. SARS should set the record straight that it prosecutes tax evasion, with no one spared.

• SARS should consider prosecuting a person from each segment of society; perhaps at least one politician, a professional business person who made a living from VAT collected and not paid to SARS, persons who illegally used offshore trusts and other structures to evade taxes, taxpayers who falsified expenses, a payroll practitioner who helped operating an illegal payroll, etc. When it comes to simple prosecutions like someone who did not do their tax returns, pick someone who will send a message, such as a partner in a law or accounting firm or director of a listed company.

• A special place must be reserved in prison for the tax practitioners who devise these fraudulent schemes to “help” taxpayers in getting away with illegal claims – some of these names must be on the prosecution list, to ensure the deterrence factor reverberates across the tax base.

​
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 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/

​

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/

​