Key Exchange Control Updates Impacting Offshore Transfers

The Financial Surveillance Department of the South African Reserve Bank (SARB FinSurv) has issued important updates to the Currency and Exchanges Manual for Authorised Dealers (Exchange Control Manual), directly affecting individuals who wish to effect cross border transfers.

These changes focus on tax compliance requirements for foreign capital allowance transfers by private individuals – including both South African tax residents and those who have ceased tax residency.

The central objective of the latest changes is to reinforce the principle that full tax compliance is a prerequisite before Authorised Dealers may process any foreign transfers by individuals.

Key Changes to the Exchange Control Manual

AIT and TCS Definitions Now Included in the Exchange Control Manual

The South African Reserve Bank (SARB) has officially included definitions for AIT (Approval International Transfer) and TCS (Tax Compliance Status) in the list of definitions within the Exchange Control Manual. This follows the implementation of SARS’s enhanced AIT TCS process in April 2023.

The introduction of the AIT by SARS in 2023 brought notable changes to the TCS process, most significantly the consolidation of the previously separate “Emigration” and “Foreign Investment Allowance” TCS pins into a single, unified pin: the Approval for International Transfer (AIT) TCS pin. At the time of SARS’s update, the Exchange Control Manual had not been updated to reflected these changes. That has now been rectified.

Tax Compliance Status Is Key for Moving Money Out of South Africa

The Exchange Control Manual stipulates that, in addition to the standard tax compliance obligations, Authorised Dealers (i.e., local commercial banks) may not process any foreign capital allowance transfers if an individual’s SARS tax compliance status reflects non-compliance. A non-compliance status will have to be regularised with SARS and then only may the transfer of funds occur. Furthermore, the amount transferred may not exceed the limit approved by SARS.

Rules for Individuals Who Ceased Tax Residency

For individuals who have ceased South African tax residency and intend to transfer pre-retirement withdrawal benefits from pension, pension preservation, provident, provident preservation, or retirement annuity funds, SARB FinSurv has confirmed that a SARS tax directive will serve as proof that the individual has maintained tax non-residency for at least three consecutive years. This tax directive now forms part of the required supporting documentation and must be provided before an Authorised Dealer will proceed with the transfer of funds originating from these retirement products.

New Compliance for Trust Distributions to Non-Residents

Another important development affects non-residents who are not registered on the SARS database but wish to transfer income or capital distributions from South African inter vivos trusts. These individuals must now obtain a Manual Letter of Compliance – International Transfer from SARS before such transfers may proceed.

Previously, there was no requirement for non-residents to secure tax clearance for transfers involving inter vivos trusts, making this a significant tightening of compliance obligations.

What This Means for You

Both residents and non-residents must ensure full alignment with SARS requirements before Authorised Dealers may proceed with any foreign transfers. The latest changes serve as a reminder that exchange control and tax frameworks are becoming increasingly integrated, and professional guidance remains essential to navigate them effectively.

Individuals, particularly those transferring inheritance proceeds, retirement benefits, or trust distributions, must now ensure that all SARS-related documentation is in order before approaching an Authorised Dealer.

Expert Guidance on Exchange Control compliance

At the Exchange Control Advisory Hub, we help individuals navigate the often-complex exchange control requirements set by the South African Reserve Bank. Whether you’re a South African resident, a non-resident, or have ceased your tax residency, we are here to simplify the process and ensure you’re fully compliant at every stage of your international financial journey.  We will help you stay informed, compliant, and in control.