South Africa eyes Nomad goldrush, targets wealthy remote workers in new draft regulations

South Africa has published draft regulations for digital nomads visas, inviting the public to share feedback and comments that will shape the eventual outcome of the visa.

If the regulations are eventually adopted and implemented, South Africa will become the fifth African country to offer digital nomad visas. For South Africa, the goal is to position itself as the global hub for digital nomads.

According to data by Nomad Hive, nomads spend an average of $2,000 monthly on accommodation, food, local transportation, work-related expenses, and leisure activities.

South Africa’s digital nomad VISA will target nomads earning at least R1 million (~$53,000) annually.

“The inflow of digital nomads promotes sharing of ideas and experiences which can internationalise South Africa’s tech ecosystem,” said Will Green, founder and CEO of venture firm Co.lab.

South Africa will be enticing to remote workers because of a relatively low cost of living, and a weak exchange rate, said Blake Blake Player, head of growth at crypto firm VALR. “Many tech companies may start to look at entering the SA market more formally,” he added.

Despite the economic benefit of an influx of digital nomads in the country, South Africa’s current regulatory regime might prove difficult to overcome.

South Africa’s current legislature has numerous laws that have to be amended if the digital nomad bill is to become law.

For instance, the digital nomad bill proposes an income tax exemption for foreign employees working in South Africa for less than six months, and the income tax act would have to be amended to provide for the exemption to be legal.

The proposed tax administration bill introduced by South Africa’s Revenue Service in 2023 is another potential obstacle. Under the proposed amendments, employers of South Africa-based remote workers must deduct pay-as-you-earn (PAYE) tax.

Foreign companies would need to apply for and receive a SARS income tax number and register a branch company within South Africa.

“The process of having to set up office here to access South African and digital nomad remote talent might prove too much for some companies,” said Ivan Breytenbach, income tax administrator at Raakvatters Accounting & Consulting.

Another legislation that might put off digital nomads is a proposed amendment to the country’s Copyright Bill. For example, universities and other institutions will have the right to reproduce software products without having to pay producers of said products. “What the bill proposes [is] to water down copyright owners’ protection, and that [is] deeply concerning,” stated Sadullar Kajiker, professor of intellectual property at the University of Stellenbosch.

This could prove to be a disincentive for nomads building proprietary software while in the country.

Although the economic benefits of the digital visa are clear, the political will to overcome regulatory challenges will be crucial if South Africa’s nomad visa is to become a reality.