South Africa should continually strive to streamline its taxation and immigration policies to be more attractive to investors, a survey by KPMG International has found.

Published on Wednesday, the study said a challenge for governments seeking international investment would be the measures they took to develop the local workforce and attract foreign talent.

"At a time when global confidence is at a low point, it is a far-sighted action that will help countries ride out the storm and lay the groundwork for future growth," the study said.

KPMG International's survey covered 260 senior human resources decision makers representing large multinationals in 12 countries, Australia, China, Hong Kong, Singapore, Japan, India, the United Kingdom, the United States, Germany, Switzerland, and South Africa.

Asked where they preferred to locate operations, nearly three quarters of companies polled said they looked for favourable business conditions, including tax incentives, and then either trained local workers or brought in workers from elsewhere.

A similar majority wanted to see governments implement policies to encourage business to settle in a country, and then allow them to build  the workforce they needed by hiring from wherever the best talent could  be found.

Most South African respondents saw tax incentives for business as a priority for governments wanting to attract foreign workers, but only half believed that incentives should be extended to the workers themselves.

Nevertheless, there was a large degree of support for a range of different individual tax measures, with low personal tax rates, targeted concessions for qualified migrants and even direct payments to migrants regarded as effective in attracting labour, the survey said.

Beyond simply filling roles, many companies believed that hiring foreign workers improved the company, with 69 percent claiming that they helped foster better understanding of global markets, and 76 percent saying that foreign workers helped develop a valuable global mindset.

But for nine out of ten, this also meant that governments would need to collaborate on reducing barriers to immigration.

"South African business holds a range of views on where the responsibility for attracting and keeping foreign labour actually lies; with 45 percent saying it lies with governments, 35 percent saying it lies with business as a whole, and a further 45 percent saying it is the responsibility of individual businesses," the survey found.

There was strong agreement, however, among 75 percent of respondents  on the importance of tax policy as a factor in the decision making process when choosing a location.

Harmonisation of tax rates between countries was a popular option for almost all respondents as a means of improving flows of labour, and 85 percent saw measures to improve the portability of pensions in the same light.

Of the 65 percent which preferred to locate where business conditions were favourable and then bring in labour, 25 percent was made up of South African respondents.

The South African opinion was clear as many companies were integrating their business into Africa and most, if not all sent middle management and senior management to start up the business in the new African countries, the survey said.

Companies would prefer to hire qualified people from wherever they could find them in the world, but in practice, 60 percent hired locals, not because they were necessarily the most productive workers, but because they were easier to hire than foreigners, the study found.

In South Africa, the skills shortage created a rift between what businesses wanted and what they were able to acquire.

"The requirements for businesses in South Africa bring additional layers of red-tape to the process.
"Many companies are not operating as efficiently or productively as they might because of a lack of local talent... These companies are looking to fill the gaps with foreign talent," the survey found.

South Africa had a slight upper hand in this regard when investing in African countries, as South Africa has a tax treaty network with many African countries.

"This in turn eliminates a few barriers to employing foreign workers  from South Africa."