South African Expats – Is Your South African passport at risk?

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Expatriate Tax Exemption Changed

The tax law changes for 01 March 2020, limiting the tax exemption to R1m, have been promulgated. This has caused many South Africans abroad, very often for the first time, to consider the legal formalities of terminating their South African tax and exchange control residency. The financial emigration process does not impact your South African citizenship status, as this is purely a compliance formality from a South African Revenue Service and South African Reserve Bank perspective.

SARS confirmed passport status does not impact tax status

The South African Revenue Services is very aware of the differences between laws falling under the Department of Home Affairs and the Income Tax Act, even releasing a statement noting that –

“…Remember, the change is not related to citizenship and should not lead to South Africans giving up their passports, as its application rests solely on tax residency. Individuals who give up their passports may find they are still tax resident in South Africa and may still be liable for South African tax.”

Simply put, giving up your passport does not release you from your obligations to pay tax to SARS. Conversely, doing financial emigration which confirms you are not liable for tax on your world-wide income, does not impact your South African passport status.

So when can you lose citizenship?

In terms of the South African Citizenship Act No. 88 of 1995 where a South African citizen makes an application to obtain citizenship of another country, once obtained, you automatically lose your South African citizenship. The question on many expatriates lips are how this is possible, when we know you are Constitutionally guaranteed of South African citizenship by right of birth?

The solution

To give effect to your Constitutionally entrenched right, the Citizenship Act makes provision for “dual citizenship”. Section 6(2) of this Act states:

“Any person referred to in subsection (1) may, prior to his or her loss of South African citizenship in terms of this section, apply to the Minister to retain his or her South African citizenship, and the Minister may, if he or she deems it fit, order such retention.” (Our emphasis)

This application must be done before you have obtained your second citizenship and, in our view, cannot be legally declined where application is correctly done.

Where you have missed this deadline, you have technically given up your South African passport. I have consulted with one of the leading experts in the market hereon, Marisa Jacobs (marisa@xpatweb.com) and she mentioned that the loss of South African citizenship is not always equally enforced. There may be many South Africans who hold two citizenships and have never applied, neither had any issues with renewing their South African passport.  She mentioned that the prudent approach, where you have obtained a second citizenship, but have missed the opportunity to proactively apply for dual citizenship, is a special process which can be followed to get this still ratified with Home Affairs.

Breathe A Sigh Of Relief

As an attorney, the only conclusion I can come to is that the writer of the previously mentioned article has confused a variety of South African legislation in coming to the conclusion that one must hand in their passports once moving abroad.

Saffas, I can confidently say that there is a legal and safe process to ensure that your foreign income stays yours, without losing any form of citizenship rights in South Africa, and thus keeping your SA passport safely in your pocket.

Author: Jonty Leon

Plugging the gaps in SA's scarce skills supply

Plugging the gaps in SA’s scarce skills supply

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However, there are critical gaps which require immediate attention.

Marisa Jacobs, head of immigration and mobility at Xpatweb, says South Africa should follow the international example: “Import the skills until you have the skills”.

The 2017 Critical Skills Survey, done by her firm, shows that 77% of the participants struggled to recruit “critically skilled” individuals locally, but 76% of the participants indicated that they could find the skills internationally. However, 90% found the process of recruiting internationally to be prohibiting.

Jacobs says this is largely a “perceived problem”. Although the process may be onerous in terms of the documentary burden and the time to process applications for work visas, it is not preventing firms from importing critical skills.

The survey found that employers and multinational companies found it most difficult to recruit engineers (22%). However, information, communication and technology (15%), financial specialists (10%) and specialised technical skills (9%) also prove to be tough areas to find people with the right skill sets.

The Department of Home Affairs published a list of at least 12 sectors where the country is in need of critical skills. This include agriculture, architecture, economics, information communication and technology, engineering and health professionals. This list has remained unchanged since 2014.

Government’s 2017 White Paper on International Migration sites the lack of strategy in the current international migration policy as contributing to the skills shortage. The result is South Africa’s inability to respond to the shortage issue.

The paper further states that the policy is not linked to the skills development and investment priorities of the country and prevents the country from effectively competing for requisite skills in a proactive and flexible manner.

Jacobs notes that in times of economic growth there may be specific skills that are immediately needed. There must be flexibility in the immigration system to allow for a quicker turn-around time in acquiring these skills internationally.

“Once the projects are off the ground the transferring of skills become critical for sustained growth in the country,” says Jacobs. However, the importance of importing skills until the country have the skills cannot be emphasised enough.

The white paper also states that the migration policy “lacks cooperative strategies for attracting and retaining international migrants with skills and capital, and a historic blindness to the retention of international students studying towards occupations that are needed by the economy”.

Jacobs further notes that companies in need of ICT specialists have found the skills they need in India, whilst companies in mining have been successful in attracting talent from Australia.

Statistics from the white paper indicate that from June 2014 to January 2016 the country issued permanent residency permits to 2 175 skilled foreigners. This represented 7% of the total permanent residency permits granted in the period.

This is a concern since the aim of the policy is to promote economic growth through the granting of business, critical skills, and study visas, government states in its white paper, Jacobs says.

She adds that the importation and retention of critical skills does not take away job opportunities from South Africans, since these skills are not available in the country.