The logic behind National Treasury’s new proposed tax legislation that impacts remote workers should be questioned, as it can create issues for persons working remotely for foreign companies in South Africa.
This is according to Deel, a global payroll and HR platform.
If the proposed amendments to the Employee's Tax Schedule of Income Tax are implemented, overseas employers would be required to register for and withhold Pay-As-You-Earn to the South African Revenue Service (Sars), in addition to paying UIF (Unemployment Insurance Fund) and Skills Development Levies.
“We welcome any legislation that cracks down on the non-payment of taxes, but we question moves that may negatively impact the ability for remote workers who earn in foreign currencies to live and work in South Africa,” said the head of Deel in the country, Ronny Levitan.
Levitan stated that while South Africa was desperate for foreign investment, actions that restrict foreign firms’ capacity to pay in foreign currencies may have the unintended consequence of diminishing global interest in the nation and limiting local talents’ ability to be exposed to multinationals.
“Whether they work remotely or not, economically active employees are crucial to the economy and thousands of remote workers who earn in foreign currency have their earnings deposited into local bank accounts. They pay tax and contribute to the fiscus by paying VAT and other everyday costs of living, be it food, entertainment, accommodation or transport,” he said.
According to him, numerous other nations, such as Spain and Portugal, are making it more appealing for remote employees.
If Mzansi wishes to compete on that stage, Levitan said it must create a welcoming atmosphere for digital nomads rather than making it impossible for them to make South Africa their location of work and pleasure.
Similarly, global companies that regard South Africa as a potential source of skills and talent should be encouraged to expand their presence in this market.
Expat Insider, one of the world’s largest and most cited surveys on living and working abroad, recently found that South Africa ranks in the bottom 50% or lower across several metrics, including quality of life, travel and transit, healthcare, safety and security, salary and job security, and work culture and satisfaction.
Despite this, there is still a lot of interest in this country from both global corporations and local people because of its low cost of living, fantastic lifestyle alternatives, and wonderful weather.
Many remote employees are paid based on global compensation standards, which are frequently much more than local counterparts, and they benefit from earning in dollars, pounds, or euros.
IOL