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Expat Talk: Important things to know about South African exchange control regulations when living abroad

Expat Talk: Important things to know about South African exchange control regulations when living abroad

February 23, 2024


Packing your belongings for a new chapter abroad? How exciting! When you emigrate, it can feel like an extra hurdle having to navigate the world of exchange control regulations on top of getting acquainted with life in a foreign country. This can dampen the excitement, but fear not, fellow expat, this article is your passport to understanding South African exchange control rules and regulations. Without further ado, let’s dive in and discover everything you need to know about exchange control allowances and transferring funds. Let’s clear the customs of confusion and ensure your international relocation is nothing but smooth sailing!

Background to South Africa’s exchange control: what’s the history?

South Africa’s exchange control system has a complex history. Deeply rooted in the country’s economic and political landscape, exchange controls were instituted during the apartheid era, initially aimed at preserving our nation’s financial stability and managing its foreign currency reserves. Over the years, the regulations continued to grow more restrictive in order to limit the flow of capital in and out of the country.

Since 1994, South Africa has undergone significant reforms, gradually easing exchange controls to encourage international investment and trade. Despite these changes, remnants of the stricter system still linger and continue to impact cross-border transactions and influence the broader economic environment in South Africa.

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South African tax resident individuals – exchange control dispensations

As long as you remain a South African tax resident (whether you’re still living in the Republic, or you’re now living abroad) you have access to two annual exchange control allowances when it comes to moving money out of South Africa, which can be used to transfer up to R11 million per adult individual, per year.

  1. The Single Discretionary Allowance: Move up to R1 million per year offshore, no prior tax clearance necessary.
  2. The Foreign Capital/Investment Allowance: Move up to R10 million per year offshore, subject to a prior tax clearance being obtained from the South African Revenue Service (SARS)by means of the Approval of International Transfers (AIT) clearance process.

Remember: you are a South African tax resident until you complete the official process of tax emigration through SARS, in order to have your status changed from resident to non-resident for tax purposes.

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Exchange control rules for South African non-tax residents

If you have permanently left South Africa and you completed the official process of tax emigration through SARS, you have to obtain a tax clearance by utilising the Approval of International Transfers (AIT) clearance process in order to transfer money out of South Africa. You will no longer be subject to the same exchange control limitations as South African tax residents, as long as you can verify the legitimacy of the source of your funds, and show that you are in good standing with the tax authority. If you want to transfer more than R10 million overseas, exchange control approval must be obtained from the South African Reserve Bank as well.

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FinGlobal: cross-border financial specialists for South African expats

Need a hand planning your smooth financial transition before, during and after your permanent relocation from South Africa? FinGlobal can help. We’ll walk you through every step of your financial migration, ensuring that your money moves are all handled efficiently, cost-effectively and in a manner that is compliant with new tax laws and exchange control regulations.

To find out how we can assist with exchange control advisory, tax clearance, tax emigration, international money transfers and more, get in touch with us using the contact form below.

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