In the 2020 Budget Speech it was announced that the National Treasury was going to give the South African Exchange Control regime a total overhaul in order to modernise outdated, unnecessarily restrictive rules and procedures. In addition to rewriting the South African Exchange Control Regulations (that have been in place since 1961), the National Treasury shared plans to implement a risk-based approach to foreign currency transactions and capital flows with the introduction of a capital flow management system with a renewed tax compliance focus.

Two years later and some of these changes are now starting to filter through. Let’s take a look at recent updates to South African exchange control rules and how they affect South Africans.

Exchange control

What exchange control updates are important for South Africans to know?

For exchange control purposes, there is no longer a distinction made between emigrants and residents – they are now treated the same for cross-border transaction purposes. In the 2022 Budget Speech, the National Treasury reaffirmed its commitment to exchange control modernisation, and highlighted a number of proposed updates that will affect individuals:

• Subject to allowance limitations (the foreign capital and single discretionary allowances) individuals will now be permitted to export dual/multi-listed securities to a recognised foreign securities exchange.
• South African residents are now allowed to use their discretionary and/or foreign capital allowance to participate in online foreign exchange trading, as long as they do not use their credit, debit or vitual cards to do so.
• Residents can now retain offshore gifts received on or after 23 February 2022 without the need to repatriate these gifts.
• Residents are now allowed to lend or dispose of authorised foreign assets held offshore to other residents, however, this rule relaxation will not apply retrospectively and any past irregular transactions done before 23 February 2022 will still need to be regularised.
• Residents can now transfer more than R10 million annually to foreign domiciled and registered trusts, as long as they meet tax and reporting requirements.
• Authorised Dealers may allow, on a once-off basis, the transfer abroad the remaining cash balances (of up to R100,000 in total) for individuals who have ceased to be residents for tax purposes, without reference to the South African Revenue Service.

The Currency and Exchanges Manual for Authorised Dealers was amended to reflect these changes.

FinGlobal: cross-border financial service experts

Need a hand navigating the new exchange control regulations? Unsure of how to go about making your international money moves now that everything has changed? We can help. FinGlobal has a team of highly-experienced foreign exchange specialists, international financial planners and tax practitioners to guide you through every step of achieving your cross-border financial objectives. Leave us your contact details and we’ll be in touch to discuss your unique requirements.