S.A Exchange Control

The South African Reserve Bank has undisputed authority over the countries exchange control regulations and oversees the movement of capital both into and out of the South Africa. The Reserve Bank delegates' authority to their official dealers (banks) who then administer and regulate the in/outflow of capital on their behalf.

South African Exchange Control Regulations stipulate:

• The regulations are applicable across all overseas transactions regardless of size.
• No South African resident is permitted to conduct a foreign transfer without prior approval.
• Only authorised official dealers (banks) are allowed to perform currency transfers.
• Residents must adhere to the predetermined amounts set for personal transfers.

How do Exchange Control Regulations affect South African Residents?

For South African residents, the Exchange Control Regulations dictate the amount permitted and under what circumstances an individual can transfer capital outside of South Africa. The Exchange Control Regulations are only applicable to South African residents, and do not affect citizens and/or permanent residence holders.

Applicable allowances that are permitted for overseas transfers:

• Emigration allowance
• Capital investment allowance
• Discretionary allowance

Emigration allowance key points:

• The Emigration allowance equates to 4,000,000 ZAR per adult and 8,000,000 ZAR per family unit.
• Personal Effects – A supplementary allowance for the exportation of personal goods to the value of 1,000,000 ZAR is also available to emigrants.
• Discretionary Allowance – Emigrants are permitted to transfer capital in accordance with the annual discretionary travel allowance which equates to: 1,000,000 ZAR per adult and 200,000 ZAR per child.
• Supplementary amounts – At the discretion of the Reserve Bank a supplementary amount in addition to the above mentioned allowances can be transferred offshore.

Further Information:

• Foreign assets will not be subtracted from the above mentioned allowances.
• Transfers that fall under Section 0 (6.1.1) of the Exchange Control Manual will be deducted from the above mentioned allowances.
• Applicants must have been a resident of South Africa for at least five years concurrently.
• The South African Revenue Services (SARS) must corroborate that the correct provisions have been put in place in order to ascertain if there are any outstanding tax obligations that will need to be settled.
• The emigration applicant is required to provide documentation to prove that they have been granted permission to take up overseas residency. The applicant must also declare to the applicable authorised dealer (empowered by the Reserve Bank) that they intend to permanently relinquish their South African domicile.

Capital investment allowance

Key points

• Allowance – 4,000,000 ZAR per adult, per annum.
• Conditions - Capital must be used to invest in offshore funds, property, bank accounts and/or other asset classes held offshore.
• Applicable to - All taxpayers aged 18 or over.

Details

Authorised dealers (banks) can sanction private individuals (natural persons) who are tax payers and over the age of 18 years, to invest up to 4,000,000 ZAR per annum outside of South Africa, on condition that they in good standing with SARS.
Prior to the transfer of any funds, a specific tax clearance certificate must be issued by SARS and the presented to the applicable authorised dealer.

Discretionary Allowance

Tax paying residents (natural persons), who are 18 years old and above, can, in extenuating circumstance benefit from a single allowance of up to 1,000,000 ZAR per annum, without the need to obtain a Tax Clearance Certificate.