Tax changes for remote workers in South Africa – what you should know

 ·24 May 2024

Tax experts in South Africa have flagged issues with South Africa’s new immigration laws that introduce remote working visas for the country – specifically around changes to taxation that is not coming from the South African Revenue Service (SARS) or Treasury.

The Department of Home Affairs reintroduced amendments to immigration laws this week, bringing a host of changes for visas and critical skills.

The big changes include introducing the Remote Work Visa, which is designed for individuals wishing to work in South Africa while working for foreign employers.

The visa targets high-earning individuals and aims to stimulate the South African economy.

Under the new regulations foreign workers who earn more than the equivalent of R1 million a year can work in the country remotely, and won’t have to register as taxpayers.

However, following the backlash from the tax fraternity, the DHA amended the regulations so that the tax exemptions were no longer automatic and that the applicable period was extended from the initial 12 months.

Foreign remote workers will now need to apply to SARS for the exemption, and the visa is only applicable as long as it does not exceed 6 months in 36 months.

According to Tax Consulting SA, while this small change is an improvement on the previous laws, it still has the Department of Home Affairs meddling in tax laws it has no mandate over – stepping into the domain on National Treasury and SARS.

“Foreign workers are now provided with an option to apply to SARS for tax exemption. The question which arises, however, is whether or not any such exemption exists under South African law. Tax experts have responded with a resounding ‘no’; there is no such provision,” the group said.

“In the absence of an existing tax exemption, it remains concerning that the Department of Home Affairs continues in its habit of trying to make tax law, despite challenges raised to the initial Regulations.

“Alternatively, can we expect National Treasury or SARS to confirm the introduction and implementation of this new exemption? Tax Consulting SA has written to SARS officials asking this very question, and hope to get clarity in the coming weeks.”

Cap on tax exemption

The remote visa issued in terms of the Regulations must be valid for no longer than 6 months in a 36-month period, replacing the previous provision of 6 months within any 12-month period.

Conversely, foreign remote workers exceeding their 6-month stay in South Africa are obliged, by virtue of the Regulations, to register as a taxpayer with SARS.

“This is, again, contrary to the current tax framework, whereby the Commissioner for SARS issues a Public Notice determining the tax obligations for individuals and companies each year,” Tax Consulting said.

“It appears that, irrespective of the nature of the income received by these foreign workers, and whether any such income is subject to tax in South Africa, they will need to register for tax due to the type of visa held by them.”

Muddy waters

Tax Consulting said that when the tax treatment of an individual is premised on their nationality and the nature of their visa rather than the nature of the income earned by them, “it creates a complex and potentially inequitable tax landscape”.

“It remains unclear why the Minister is offering a tax exemption to one category of foreign workers while mandating compulsory tax registration for another, especially since neither provision appears to exist in the current tax laws,” it said.

“Taxpayers will need clarity from SARS on how these exemptions will be implemented and enforced. Until such time that these ambiguities are resolved, the impact of the Regulations will remain uncertain.”

Read: Big visa changes for South Africa are back

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