The rise of digital nomads also stands to drive foreign investment in the local property market, where properties are purchased by foreigners to offer as spaces that digital nomads can rent for the duration of their stay. In many cases, very little of that shorter-term rental revenue enters our country’s tax system, Viljoen added.
She expects South Africa’s tax authorities will start to find ways to keep these digital nomad-induced revenue dilemmas in check.
The country’s proposed remote working visa will exempt digital nomads from registering with the South African Revenue Service (Sars), as long as it is issued for a period of less than six months within a 12-month period.
“I suspect that some people will still come in on a tourist visa and just dip under the radar — stay here for a maximum of three months, earn money from foreign employers, and go away again. Those digital nomads don’t become part of the tax system,” Viljoen said.
Sian Gaffney, a senior associate at Bowmans, said there is nothing preventing digital nomads from using a long-stay visa to avoid registering with Sars. She also wasn’t aware of any evidence that remote work visas create greater tax compliance among these types of tourists.
That said, Gaffney added that the visa has the potential to encourage foreign employers to send their workers to explore the South African market for investment opportunities.
While Satsa’s Frost acknowledged the affordability concerns created by digital nomads, he said the benefits of welcoming them far outweigh the potential downsides.
“By proactively addressing concerns and implementing strategies to ensure the influx of nomads positively impacts all residents, South Africa can become a model for sustainable and inclusive economic development in the era of remote work,” he said, adding that their presence has the potential to reduce the effect of seasonal fluctuations.
Fedhasa’s Anderson cited 2023 data showing that South Africa’s tourism recovery is sitting at 79% of pre-pandemic levels.
“We have seen many discussions surrounding the impact of digital nomads on locals and we cannot ignore the fact that the presence of digital nomads can influence local economies, potentially affecting the cost of living,” she said.
“However, this challenge is not insurmountable and can be managed through careful policy planning and community engagement. Ensuring a balance between welcoming digital nomads and protecting local interests is crucial.”