South Africa Proposes New Visa for Remote Workers

South Africa Proposes New Visa for Remote Workers

South Africa’s introduction of a new remote working visa is a strategic response to the global shift towards flexible work arrangements, reflecting the country’s adaptability to changing work and travel dynamics post-pandemic. This policy aims to attract international professionals and digital nomads by capitalizing on South Africa’s attractive features, including its scenic landscapes and robust infrastructure, to blend work with leisure effectively.

The proposal is set against the backdrop of a rising trend in remote work, accelerated by technological advancements and the recent global health crisis. It is envisioned to boost the local economy by attracting foreign spending and stimulating various sectors, including real estate and hospitality. Additionally, it positions South Africa as a forward-thinking nation eager to attract global talent and promote a multicultural professional ecosystem, enhancing its socio-economic development and global standing.

Remote work will be catered for under the Immigration Rules for a foreigner working in the country for a foreign employer under specified conditions.

On 8 February 2024, the Department of Home Affairs published the Draft Second Amendment of the Immigration Regulations 2014 (“the Draft Regulations”) for public comment. Written submissions, according to the Department of Home Affairs, are due by 29 March 2024.

Inter alia, the Draft Regulation provides for a visa in respect of work conducted (as contemplated by section 11(2) of the Immigration Act, 2002) for a foreign employer on a remote basis, provided that the foreigner concerned earns ‘no less than’ the equivalent in the annual sum of R1 million, although it is not entirely clear whether this should rather be ‘no more than’ R1 million per year.

Further, the Draft Regulation provides that in instances where such a visa is issued for a period not exceeding six months within 12 months, registration with SARS shall not be required from the foreigner. In any other instances, the foreigner shall have to comply and register with SARS for such a period.

Against this background, the following questions are posed from a tax perspective in this proposal. First, how can this dispensation—that is, whereby an individual will not be compelled to register with SARS as a taxpayer—be welded into the current provisions of the tax law relating to registration? Therefore, most probably, it would be necessary to modify the Income Tax Act in order to provide for this and to adjust to the rules on immigration. It also does beg questions whether and in what manner this visa may play into the new dispensations in respect to taxation, where non-resident employers are required to register and withhold PAYE on the remuneration of employees who are tax residents in South Africa. Registration as taxpayers with SARS, except where PAYE is deducted, would therefore be a must for the employees, regardless of the number of days they spend in South Africa. A non-resident employer, therefore, would have no PAYE obligation due to the fact that employees will not be required to register for tax status with regard to the remote work visa.

Generally, under the double tax treaties of South Africa, employment income to an individual is exempt when an individual is present in South Africa for less than 6 months. It would mean that employees would, in any case, not be requiring registration as taxpayers.

There needs to be an explanation to the foreign employees and their employers regarding the interaction of such present tax legislation with such a distant visa proposal. ENS will be making submissions in relation to the tax elements of this proposal and submitting that realignment of the tax rules will have to be considered. However, it is noted that in the Budget Speech of February, no foreshadowing of such tax amendments was made.

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