Skilled people are leaving South Africa – this is where they are going

A significant number of skilled South Africans are leaving the country in search of greener pastures, says Izak Smit, executive director of the Professional Provident Society (PPS).

Talk to Moneyweb Radio, Smit said the reasons for leaving are many and can be positive, such as better career opportunities. However, he said there are several push factors as well, including the country’s high level of taxation, education, personal safety and health.

Smit said “traditional” expat countries are still the most popular destinations for these South African immigrants, with the UK, Canada, Australia and New Zealand generally at the top of the list.

However, in recent years that has changed with the Americas and the Far East, also population destinations, he said. Smit said not all of these South Africans would necessarily work for international companies.

He said it is increasingly common for someone to move to another country while working for a South African company.

Smit said the decision to immigrate is also more granular than just moving. These are often opportunities in a particular city where they might relocate, he said.

Taxation is an incentive

Along with one of the highest corporate tax rates, South Africa also has one of the highest personal tax rates in the world, said Dr Brian Benfield, former professor of economics. .

In an analysis for the Free market foundation, Benfield said South Africa’s top marginal rate of 45% is the second highest in Africa after Côte d’Ivoire.

“All other African countries have a lower personal tax rate. How do we intend to compete with African tax rates that are on average two-thirds of ours, and many much lower than ours? Keep in mind that an additional 15% VAT is paid almost every time a South African employee spends hard-earned after-tax income.

Benfield said having to pay twice for the same essential services in security, policing, schooling, health care, stable water and electricity supply, etc. makes South Africa an increasingly less attractive jurisdiction.

“This blatant lack of appeal as a place to live, work or invest is made even more unattractive by crime and the relentless threats of further state confiscation of assets without compensation, property already paid for. with declining after-tax income. “

Benfield said South Africa also has one of Africa’s highest corporate tax rates at 42.4% (28% + 20% on dividends).

“What hope do we have when our neighbors like Botswana take only 20% and Mauritius only 15%? There are at least seven countries in the world where corporate taxes are zero. How can we compete with them?

“There are 15 other countries where the total corporate tax is less than 15%. Many others have corporate tax rates below 30%. The overall average corporate tax rate around the world is less than 24%. “

Brain drain

Rand Merchant Bank chief executive James Formby previously warned that the country’s post-containment economy would likely be held back by a brain drain of skills leaving the country.

In an interview in February, Formby said the country was losing skilled and experienced people in their 30s and 40s to overseas positions.

Data from Boston Focus Group shows that most people’s views on work have been altered by the pandemic, so countries that have handled the pandemic well by “flattening the curve” have grown in popularity as emigration destinations.

Desired emigration countries include:

  • Canada;
  • WE;
  • Australia;
  • Germany;
  • UK;
  • Japan;
  • Switzerland;
  • Singapore;
  • France;
  • New Zealand.

“On an overwhelmingly positive note, 57% of those polled indicated that they would be willing to work remotely for a company that did not have a physical presence in their home country,” the group said.

Read: SARS risks pushing wealthy taxpayers to withdraw their money from South Africa

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