South Africa introduces new regulations on moving assets overseas

Monday, 05 June 2023
The South African Revenue Service (SARS) has introduced new controls on the procedures used by resident individuals to transfer their funds overseas.
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Under the previous system, any individual could use their foreign investment allowance to transfer up to a total of ZAR10 million a year abroad through an authorised dealer. The tax compliance obligations were minimal. The obligations could include simply obtaining a tax compliance status number according to whether the individual was investing abroad or emigrating.

The newly amended tax compliance status procedure now requires individuals to complete an approval international transfer (AIT) application to export capital funds abroad above their annual discretionary allowance of ZAR1 million per year. Such applications have to be accompanied by a significant increase in disclosures and supporting documentation, says law firm Eversheds Sutherland.

'All AIT applications must submit all material that demonstrates the source of the capital to be invested (whether local or foreign) and a statement of assets and liabilities for the previous three years', says the firm. This is a ‘significantly more onerous’ position which requires honest and accurate disclosures of the individual's source and nature of funds to SARS and, consequently, the South African Reserve Bank. However, the single discretionary allowance of ZAR1 million per calendar year for each individual is still in force and this new procedure is not required when expatriating funds less than that threshold.

The measure is being put forward by the South African government as part of its efforts to be removed from 'grey listing' by the Financial Action Task Force (FATF). FATF put South Africa on its 'grey list' of jurisdictions under increased monitoring in February 2023 and the country is rapidly introducing a large number of new laws to remedy the situation.


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