BUSINESS REFLECTION
After the Bell: Saying no to digital nomads
About 30 countries have introduced programmes to attract digital nomads, including Spain, Portugal, Canada and Namibia. So, here is the question: When did Ramaphosa promise that SA would introduce its digital nomad visa? The answer is almost two years ago.
Fairy tales often begin with the words, “Once upon a time…” but it turns out, not always. Sometimes fairy tales begin with the words, “If elected, I promise…”
I know. Old joke. But a function of journalists in the modern era is to go back to speeches made by politicians to see if they kept those promises. This form of journalism is particularly pertinent in SA because we are all pretty miserable now, so political speeches have the important purpose of trying to cheer us up a bit. This — perhaps unwisely — leads to promises.
President Cyril Ramaphosa is very prone to making these kinds of speeches; often when you listen to a State of the Nation Address, reading between the lines, you can tell that someone in the Presidency has had an idea and issued an instruction to what is described in SA as a “line department” that is “tasked” with putting it into effect. But the line department has neither a desire, nor the ability, nor the interest, nor all of the above, in doing said function.
One of the great ideas to arise out of the pandemic was to try to cash in on the new trend of working from home by issuing “digital nomad” visas. Since some classes of employees are no longer required to work from the office, they could notionally work from anywhere. Although in some places offices are full again, in most they are decidedly not. In New York, for instance, offices are still only about half-full.
For the host country, a digital nomad is, on balance, a win, because the employee in question is not reducing the number of jobs available in that country but is increasing the local income. It’s not much different from having tourists in your country where you are in effect exporting goods and services without having to transport anyone anywhere; they come to you. It’s also easy to organise, since in effect you are issuing what is just an elongated tourism visa.
About 30 countries have introduced programmes to attract digital nomads, including Spain, Portugal, Canada and Namibia. So, here is the question: When did Ramaphosa promise that SA would introduce its digital nomad visa? The answer is almost two years ago.
The province most keen on the idea of a digital nomad visa, sometimes called a remote working visa, is of course the Western Cape. Cape Town is just a fabulous place to work if you are a digital nomad; it’s cheap by international standards, safe-ish, naturally beautiful and reasonably tech-savvy.
The Western Cape government is consequently kinda grumpy about how long this is taking, putting out a short press statement on Friday on the topic. It points out that Minister of Home Affairs Aaron Motsoaledi has missed his own deadline to introduce the visa by the end of June. It had been 527 days since the undertaking to introduce the visa was given, according to the province.
It is worth noting that the announcement was made in April 2022, and it was mentioned again in the State of the Nation Address in February 2023. But listen, it was only a promise made by the head of state in a public address to the nation. Twice.
Maybe Ramaphosa should start his next State of the Nation Address with the words, “Once upon a time…” DM
Typical of politicians. An old joke asks “How do you tell when a politician is lying?”, “When his mouth is open”, still very true. Call me naive but I had great hopes when Ramaphosa took over from Zuma but seems they’re all cut from the same cloth these politicians: look after themselves first and last and forget everyone else.
Say an Irish IT specialist working (and billing) as a small company registered his/her normal home in Dublin, with clients all over the world, if mostly in Dublin, were to decide to rent an apartment with all amenities including sea and mountain views, for a year in Cape Town, and relocate life and work into it.
His fee invoices are settled into his Revolut account in Ireland, and he / she draws transfers to Cape Town to cover living expenses.
Which Tax authorities would have an interest in his income?
In all tax matters the answers are specific to the facts. In this case the individual appears to be an employee working in South Africa for his own company in Ireland on its Irish clients. the conventional view is that the source of his salary earnings is in SA, where he does the work. But there is a good alternative argument for the view that the source is actually the delivery of his work to the company/client in Ireland. There is no clear precedent on these facts and its one of the current mysteries of tax law in SA (and elsewhere). The answer is also influenced by the SA/Irish tax treaty and by other bits and pieces of law that are too detailed to get into here. What is clear is that both SA and Irish tax authorities will take an interest in our digital nomad and his employer.
Tx for very thoughtful answer.
Does the tax uncertainty excuse Home Affairs for taking so long to make up its mind about rules for “Digital Nomads”? I mean, even if SARS can’t squeeze him for income tax, surely it benefits SA to have foreigners (including pensioners, another similar issue, with 500 applications awaiting approval) living here and spending money brought in from O/S here?
SA spurning possible foreign income for wanting to discourage more whites from living in SA?
Not necessarily a win for everyone. Surely locals suffer as prices (rent especially) are pushed up as these nomads earn in Euros, Pounds and Dollars, while local South Africans earn much less in Rand terms and can no longer afford to live in the decent parts of the city.
Motsaledi was a disappointing Min of Health and as hopeless as Min of Home Affairs. I remain thankful he is not in practice. Patients are safe. Zuma and Phaala just as pathetic. The calibre of the professionals in cabinet is dreadful despite their qualifications. One can only wonder how these folk acquired their degrees. There is little innovation practical experience capability foresight and insight. CR is probably the biggest disappointment. An articulate idiot. The African sees the acquisition of degrees as an indicator of being educated and qualified but this is very seldom the case and very evident in an in-depth interview
Politicians aside – although it has obvious pros, introducing a remote visa needs to be thoughtfully done, because it can have very serious downsides for the locals. Especially when there is such a discrepancy between the spending power of foreigners vs of South Africans.
In Portugal it has been a disaster, causing a housing crisis, pushing up living expenses and making it harder for locals to have access to what their own country has to offer. In a country where inequality is already so high, this has huge potential to ramp things up to new levels if introduced carelessly. Ramaphosa is most likely taking his time for less salient reasons, but none the less this is not a policy to be rushed.