If we worked any closer with our farming clients
we’d be driving the tractor.
Santamis an authorisedfinancialservicesprovider(licencenumber3416).Formoreinformation,callyourbrokerorvisitwww.santam.co.za/products/agriculture.KINGJAMES47799TAX ADVICE
The infamous ‘brain
drain’ has been going
on for a long time now.
But, based on personal
experience, it seems to
be getting worse.
Block the brain drain!
W
hat can we do about the serious
flow of people and capital away
from South Africa? To try and
stop it with legal statutes would, in my
view, be akin to standing at the bottom
of the Augrabies Falls with a bucket and
trying to return the water to the source of
the Orange River. It’s just not possible.
So, what do I suggest should be done
about the brain drain? Firstly, because
South Africa is in need of capital, anyone
with an offshore business should be
encouraged to run it as tax-effectively as
possible, and earn hard currency offshore.
In effect, a return to a source-based tax
system could be a boon for business.
Someone living here and bringing in
money from offshore is, in fact, helping
the economy. Any funds coming in should
be welcomed. And the brains that put
together a business that is internationally
viable must be nurtured, not turned away.
There would be a proviso, though: in
order for the company to enjoy favourable
offshore rates, its offshore investment
must be matched in South Africa.NO BAGGAGE
Secondly, there are very many people
in South Africa who are desperate to
earn a living. However, our labour
laws are onerous, and discourage the
hiring of labour for short periods.
Instead, let people who have not managed
to find work within a certain time period,qualify as employment equity workers.
Such workers should become employable
without any onerous statutory baggage.
Thirdly, consider taxpayers who have not
been 100% compliant. In some instances
the penalties for such non-compliance
puts the owners out of business, thereby
creating more unemployment.POINTS SYSTEM
Instead, let’s create a points system
to give non-compliant businesses an
opportunity to redeem themselves.
This might be done by them providing
services to local governments in
order to get rid of their tax debt.
In this way, many of the infrastructure
faults in municipalities could be
fixed, benefitting all parties!
Companies should also be rewarded for
participating in the economy. For example,
only cars built in South Africa should
qualify for the company car allowance.
Lastly, let’s remember: no business
that is in any way ‘mobile’ will remain
in South Africa while uncertainty
prevails regarding the shareholders’rights to the property they own. (^) ▪FW
OFFSHORE BUSINESSES
SHOULD BE RUN AS
TAX-EFFECTIVELY
AS POSSIBLE
30 AUGUST 2019 farmer’sweekly 27
BY PETER O’HALLORAN
Advocate Peter O’Halloran is
a tax specialist. Email him at
[email protected].
Subject line: Tax.