Grace Ashiru
South Africa has released draft regulations for digital nomad visas, encouraging public input to influence the visa’s final form. Should these regulations be approved, South Africa will join four other African nations in offering digital nomad visas, aiming to establish itself as a leading destination for this demographic. Nomad Hive data reveals that digital nomads typically spend around $2,000 monthly on various expenses, including accommodation, food, transportation, work-related costs, and leisure activities.
South Africa is rolling out a digital nomad visa program for individuals earning a minimum of R1 million annually (~$53,000). Will Green, CEO of Co.lab, believes this initiative will foster the exchange of ideas, enriching South Africa’s tech landscape. Blake Player, from VALR, highlights South Africa’s appeal to remote workers due to its favorable cost of living and weak exchange rate, suggesting that this move could prompt tech companies to consider formal entry into the South African market.
The potential economic advantages of welcoming a surge of digital nomads to South Africa are substantial. However, navigating the country’s existing regulatory framework poses a significant challenge. Presently, South Africa’s legislation contains numerous provisions that would need to be revised for the proposed digital nomad bill to come into effect. One key aspect of the bill is its proposal for an income tax exemption for foreign workers operating within South Africa for less than six months. To enact this exemption lawfully, amendments to the Income Tax Act are necessary.
The tax administration bill proposed by South Africa’s Revenue Service in 2023 poses another potential challenge. According to the proposed amendments, employers of remote workers based in South Africa must deduct pay-as-you-earn (PAYE) tax. Additionally, foreign companies must obtain a SARS income tax number and establish a branch company within South Africa. Ivan Breytenbach, an income tax administrator at Raakvatters Accounting & Consulting, expressed concerns that the requirement to develop a physical presence in South Africa to access local and digital nomad talent might deter some companies.
Proposed amendments to South Africa’s Copyright Bill, such as granting universities and institutions the right to reproduce software without compensating producers, are causing concern among experts like Sadullar Kajiker, a professor of intellectual property at the University of Stellenbosch. This potential watering down of copyright protection could deter digital nomads from developing proprietary software in the country. While the economic advantages of the digital visa are evident, the political determination to navigate regulatory hurdles will be crucial for its realization in South Africa.
