Unlocking Mozambique's Potential

NEWS | UNLOCKING MOZAMBIQUE’S POTENTIAL: IMMIGRATION AND TAX CONSIDERATIONS

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This led to last year’s $20bn investment plan that is set to deliver liquid natural gas by 2024, and supply to global markets, including South Africa.

The need for critically skilled individuals

Multinationals in the oil and gas sector have identified South Africans with scarce skills as critical to their projects in Mozambique. These skills range from engineering, accounting, construction to legal expertise. Beyond the individual skill set of the South African market, various companies in the industry, are tendering to subcontract as part of the project and require guidance immigration and tax considerations in Mozambique.

As most of the Mozambique LNG projects are based in Cabo Delgado, and Afungi regions, it is important to consider the Mozambican legislative framework, and provincial specific legislation, and how it will impact  immigration and tax compliance.

Immigration considerations

When bringing in skilled expatriates, it is important to apply for work permits in the province they will be physically working in and not where the operations are conducted.

If the operations are conducted from a head office in Johannesburg or Maputo it will be critical to open a branch in the province where the foreign nationals will work and to apply for permits in that province.

Although it may not be difficult to set up a branch, it can be a time-consuming process. Companies who are not familiar with the legislative framework in Mozambique are bound to make mistakes, which may delay setting up of their operations and getting their work permit applications processed in time. Typical setup may take four to six weeks, Non-compliance with immigration, tax, social security or labour matters will certainly impact future dealings with authorities in the country. Furthermore, companies do not want to discover once they have completed the registration process that they do not qualify for work permits in the province their expatriates are supposed to work.

This can be avoided by making use of specialists who have already built up solid relationships with the relevant authorities and will be able to avoid “official roadblocks” that may delay operations and projects.

Government policy considerations

Mozambique encourages local employment and the quota for foreign nationals can be restrictive and costly where not adhered to. Some guidelines listed below.

  1. Companies may employ 8% foreign nationals as part of their total workforce if they have more than 10 and up to 100 Mozambicans employed.
  2. Companies can submit “out of quota” applications when they need more specific skills that are not covered by the quota allocations. The processing time can be up to six months. The fee associated with these applications are calculated based on ten times the minimum salary in the sector.
  3. The “in quota” process is more lenient, and although it is still a layered process, applications for work permits are generally granted within a month.
  4. Companies involved with LNG projects can also get certain concessions for foreign nationals when they invest in Mozambique and submit a development plan. The concession removes the quota on the number of foreign nationals it can bring in  in order to complete the project successfully and timeously.

Taxation considerations

When project houses bring foreign nationals, namely South Africans, they should be cognisant of their potential tax liability in their Home Country. When looking at South African workers, prior to March of this year, all foreign income was exempt from tax in South Africa if the expat met specific requirements under Section 10(1)(o)(ii) of the South African Income Tax Act (ITA).

However, from 1 March 2020 onwards, only the first R1.25m of the foreign income will be tax exempt going forward. This includes Fringe benefits such as motor vehicle allowances, accommodation, school fees and security measures will be included in the remuneration.

Employers’ role in mitigating South African “expat tax”

As South Africans working in Mozambique will most likely do so on a rotational basis, their options are limited in terms of tax relief. A certain level of employer “buy in” is needed in order to assist these workers mitigate or nullify the tax exposure back in South Africa.

Employers should rely on the relevant rulings or directives issued by the South African Revenue Service (SARS) when calculating the value of company benefits such as accommodation. In many African countries the “accommodation” is quite basic and can be anything from a tent to a hut, container, or a cabin. In terms of the legislation, a formula is applied to determine the value of accommodation. However, in the absence of market related documentation SARS will tax the value of accommodation at 19% of the total package. This is an unrealistically high rate for a “tent”, therefore a directive must be obtained from SARS on how to value that type of accommodation.

Employers can also allow South African expats to participate in an offshore pension fund where the employer contributes an amount of the total package to the fund, thereby reducing the taxable income of the South African. This, however, an extremely complex process and you should not use a provider that follows a “fingers crossed” approach but rather where the legal integrity of the transaction is guaranteed.

The crux of the matter is, where tax planning is not done upfront, this may increase the total cost of employing South Africans, and the additional administration of structuring packages for tax purposes may result in South Africans becoming less attractive as employees.

Concluding remarks

We strongly recommend that Multinationals looking to establish a presence in Mozambique take heed of the immigration and taxation roadblocks that may present themselves. Proper planning and due diligence must be followed to ensure a smooth transition, especially where you plan to employ critically skilled South African workers.

Africa House is hosting a B2B webinar on the 4th and 5th of August 2020, in collaboration with Xpatweb and Tax Consulting Africa, and which aims to unpack how companies with an interest in supplying goods and services in Mozambique can effectively establish a presence as well as local partnerships.

Top 10 Tips To Relocate To Mauritius With Your Pets

NEWS | TOP 10 TIPS TO RELOCATE TO MAURITIUS WITH YOUR PETS

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Pets are part of the family and considering a move without your pet, can be unthinkable for many thus creating an additional stressor to the relocation process and all-important step in the initial stages of weighing up a move.

Here are 10 tips to ease your mind on the process of emigrating your pets to Mauritius –

  1. Pets must be microchipped with an ISO 11784/11785 compliant chip; this must be a 15 digit and non-encrypted microchip. After it has been implanted, same must be scanned by your veterinarian immediately thereafter.
  1. Dogs or cats must be vaccinated prior to relocating to Mauritius. Vaccinations for rabies are essential and must be take between 60 days and 1 year of entry for initial vaccinations or between 30 days and 1 year for any booster vaccinations thereafter. Other vaccinations for dogs include – Canine Distemper, Leptospirosis, Infectious canine hepatitis, and Canine Parvovirus. For cats specifically, on the other hand, include – Feline Enteritis, Feline Rhinotracheitis, and Feline Calicivirus.
  1. All dogs and cats emigrating to Mauritius must have a rabies titer test no sooner than 30 days and no more than 6 months in advance of the date of entry. The test must be done by a licensed veterinarian and a letter provided to confirm it was compliant with regulations.
  1. An Import Permit is required. The recommended lead time to secure an import permit for your pet is 3 – 6 months. Take note that the following breeds of dogs are not allowed into Mauritius:

– American Pit Bull Terrier Japanese Tosa
– American Staffordshire Terrier Dogo Argentino
– Staffordshire Terrier Fila Brasileiro
– Blue Nose Pit Bull Boerboel
– Red Nose Pit Bull

  1. The pets have to also obtain a health certificate issued by a licensed veterinarian certifying compliance with the requirements and countersigned by a Government authority such as having been treated by a long lasting insecticide (name must be indicated) against ectoparasites and they are free from external parasites at the time of export. The health certificate has to be issued within 48 hours of departure.
  1. Your pet shall only be allowed entry with the approval of the Veterinary Officer of Mauritius. The Veterinary Officer must be notified of time of arrival and port of entry at least 3 days prior to arrival time. Once cleared, your dog will be subject to a minimum of 5 days and a maximum of 30 days of quarantine unless entering Mauritius from New Zealand or Australia in which case it will be 5 days.
  1. Pets can enter Mauritius if it comes from a country that is deemed rabies-controlled or rabies-free by the OIE. Pets from high-rabies countriesor from areas where rabies has occurred within the past 12 months will not be allowed entry.
  1. Birds, invertebrates, tropical fish, reptiles, amphibia, mammals such as rodents and rabbits are not subject to requirements of rabies vaccination, but other requirements may be needed and should have a health certificate to allow their entry into Mauritius.
  1. Pets have to be continuously residing in South Africa for 6 months prior to export to Mauritius and must be sterilized before export and entry into Mauritius.
  1. Location of the quarantine site is in Beau-Bassin Rose-Hill, a town in Mauritius, located in the Plaines Wilhems District.

Mauritius Map

While pet relocation can be a complex process, with the correct information well in advance and the assistance of a specialist, it can be an effortless process without impacting your desire to relocate to the island-style life. Should you require more information, or are interested in relocating to Mauritius, please contact us.

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NEWS | EXPATS MAY NOW RETURN TO SOUTH AFRICA UNDER SPECIAL CONDITIONS

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Xpatweb’s recent COVID-19 Work Visa Risk Impact Survey shows that from the 152 large multinationals who participated, 34% of their expatriates are stranded outside of the Republic. They have been unable to return to South Africa since the international travel ban, obviously impacting their employers as well as SARS’ tax on their earnings.

Strict Criteria

The DHA now allows long-term temporary residency visa holders, such as those on intra-company transfer and critical skill work visas, to return to South Africa. However, certain categories of expatriates remain excluded from entering the Republic. These include expatriates who are travelling from –

  1. Visa Exempt Countries for short-term visits, which include –
  • Business Trips; and
  • Holiday / Tourism.
  1. High Risk Countries, which are –
  • China;
  • United States of America (USA);
  • United Kingdom (UK);
  • Germany;
  • Iran;
  • Spain;
  • Italy; and
  • South Korea.

Application to Enter South Africa

The minimum requirements for a successful application, would typically include –

  • Compelling motivation outlining need to enter South Africa;
  • Copy of passport title page; and
  • Copy of temporary residency visa for South Africa.

The application is then submitted directly to the Minister of the DHA, which subsequently undergoes adjudication by a joint multi-departmental committee meeting held once a week.

The approval of these applications is strictly to the discretion of the Minister of the DHA and his supporting office. This approval must be obtained prior to scheduling any flight bookings to ensure a secure entry into South Africa.

Covid-19 Protocol

Once the DHA has approved an application for entry to South Africa, the expatriate will be required to undergo prescribed screening and quarantine measures.

Accordingly, these new regulations may aim to provide relief towards South African Employers and their current global mobility- and risk policies that have been implemented in effort to curb COVID-19.

Should you need to enter South Africa due to exceptional circumstances, contact us on travel@xpatweb.com or tasia@xpatweb.com for further assistance.

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NEWS | OPPORTUNE TIME FOR SOUTH AFRICANS TO EMIGRATE TO MAURITIUS

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“Under the INVESTOR scheme granting an Occupation Permit (OP) – which lets you reside and open a business in Mauritius – has been halved from $100,000 (R1.7 million) to $50,000 (R870,000). This investment remains under your control, invested in your business, with only 500 USD  (R8500) as the processing fees for the OP. If you have an OP, you can bring your parents and spouse into Mauritius as dependents without having to obtain work permits for them. The permits have also been extended from three to 10 years,” says Wareley. “Other OP options include schemes such as “professionals”, self-employed, and retirees, aimed as further easing of living and working on the rainbow island” she adds.

Wareley  believes her company has seen a rise in the number of enquiries from South Africans who are considering moving to Mauritius. “Those looking to move to Mauritius have been pleased to learn that the process has become more affordable, streamlined, and attractive to residents, entrepreneurs and business owners,” says Wareley.

Favourable tax rates for residents of Mauritius

Lead Tax Advisory of the corporate limb of Temple Group, Vandana Boolell, and Lead Corporate Advisory , Aditi Boolell, say that Mauritius’ tax system is one of the most efficient and linear, with a maximum tax rate of 15%, and with exempted income of up to USD$15 000 (R261 000) per annum. They confirmed that there are tax benefits for South Africans moving to Mauritius.

“The effective tax rates for individuals are well below those applicable to South Africa and other countries. An important difference is that Mauritian residents are only taxed to the extent of the money that they bring into the country. Any global income that isn’t sent to Mauritius won’t be taxed by the Mauritius Revenue Authority,” says Vandana Boolell.

Other key tax benefits include no withholding taxes; no capital gains taxes on property sales, sales of shares, or assets; no taxes on dividends or income; and all income being repatriable, with no caps on FOREX and with no limit on tenure.

Attractive tax policies for entrepreneurs and businesses

Vandana Boolell says that there are a variety of tax as well as customs and duty benefits for companies operating out of Mauritius, with corporate tax being capped at 15% and the effective tax rates for companies being well below 15%.

“Freeport and export activity is capped at 3%, with export activity also being exempt from the country’s 15% VAT.  Mauritius also benefits from the various Free Trade Agreements like COMESA, SADC and CECPA, among others. Other incentives include tax holidays of up to eight years for companies in certain sectors, as well as headquarters of companies – under certain conditions – that move to Mauritius. Favourable tax policies and the newly announced relaxed immigration requirements means that it now makes more financial sense for South African businesses to set up shop in Mauritius,” concludes Vandana Boolell.

AUTHOR

Tarissa Wareley - Immigration Specialist
Tarissa Wareley
Immigration Specialist

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NEWS | CHINESE CORPORATES IN SOUTH AFRICA: CORPORATE VISA KEY FOR EMPLOYING LARGE GROUPS OF EXPATS ON PROJECTS

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China imports roughly $4bn worth of minerals, ores, and metals every month according to data from Trading Economics and 85% of South African exports to China are precious metals and minerals. The South African Immigration Act plays a massive role in facilitating this foreign investment by allowing the employment of foreign labour and enabling the entry of exceptionally skilled or qualified people from China. This includes large groups of resources required to support project from construction to energy, natural resources to manufacturing.

The Corporate visa is the best and most efficient approach for Chinese corporate companies to follow as it addresses the group of expatriates, rather than attending to each application individually. It is issued to a South African registered company or branch and offers the possibility to employ great numbers of employees from abroad, all under the scope of one application. The process includes, applying to the Department of Labour and the Department of Trade and Industry respectively to support the application.  The assessment by these departments includes taking into consideration the contributions  that the company has made to the community, the number of South African employees and other motivations that you may provide which will be used to support the application. Upon completion of this process, the application is then submitted to the Department of Home Affairs for final approval and issuing of the Corporate Visas.

The law clearly places responsibility on the employer to comply with the relevant legislation and thus holds the employer liable for non-compliance. The employer is responsible to ensure that they, as an organization, adhere to the regulations and legislation when employing a foreign national as per the Immigration Act of 2002, as amended (The Act).

The Act in Section 38 stipulates as follows –

“No person shall employ –

  1. An illegal foreigner;
  2. A foreigner whose status does not authorise him or her to be employed by such person; or
  3. A foreigner on terms, conditions or in a capacity different from those contemplated in such foreigner’s status.”

A Corporate visa helps companies to manage their workforce and staffing needs and the visa is issued for a period not exceeding three years. Once the Corporate visa has been obtained, the individual candidates may then proceed to apply for their visas endorsed in each employee’s passport. Individuals who are currently in possession of a valid temporary residence visa (not visitor’s visa), may apply in South Africa at the nearest VFS and those who do not have a visa, will be required to apply in their home country at the South African High Commission or Embassy.

 
AUTHOR
Lerato Mahupela - Immigration Specialist

Lerato Mahupela
Immigration Specialist