Many South Africans living abroad still have investments back home. This might include shares in listed companies, family businesses, or portfolios that generate dividends in South Africa. For many expats, this income remains an important part of their finances. However, new administrative procedures introduced by the South African Revenue Service and the South African Reserve Bank mean that sending those dividends overseas may now take a little longer.
Under the updated rules, banks must now first confirm that the shareholder’s tax affairs in South Africa are up to date before they can transfer the funds abroad.
The good news is that dividends can still be paid offshore. The process simply involves a few additional compliance checks. Once these requirements are in place, your investment income can continue to move from South Africa to your overseas account.
Top three takeaways for expats receiving dividends in South Africa
- Offshore dividend transfers may take a little longer. Before banks can remit South African dividends overseas, they must now verify a shareholder’s tax compliance status. This extra verification step means payments can take slightly longer to process than in the past.
- An AIT application is often required for offshore transfers. Many expats will need to complete an AIT application with SARS to obtain approval for international transfer. Once approved, the individual is then issued a SARS AIT PIN, which banks use for tax compliance status PIN verification before transferring funds abroad.
- Your shares must still meet exchange control rules. Even when tax clearance has been obtained, shares must be recognised as non-resident assets under the exchange control framework overseen by the South African Reserve Bank. Ensuring this is in place helps avoid delays when transferring dividends offshore.
Understanding SARS AIT – Approval for International Transfer
A key part of the updated process is the Approval for International Transfer (AIT) system managed by SARS. This process was introduced to confirm that a taxpayer’s affairs are in good standing before funds leave South Africa.
When an individual makes an AIT application, SARS takes the opportunity to review whether they have met all relevant tax compliance requirements. If everything is in order, SARS issues an AIT PIN. Banks then use this number to complete Tax Compliance Status PIN verification before releasing funds offshore. While the process adds an extra step, it is designed to create a more transparent system for international transfers.
Read more: International money transfers from SA – what SARS wants you to know about the AIT process.
Why Tax Compliance Status and Tax Compliance PINs Matter
Under the updated rules, demonstrating an up-to-date Tax Compliance Status has become an important part of moving money abroad. If you are still registered with SARS, your tax records need to be current. Once SARS confirms this, it will issue a Tax Compliance Status PIN, which banks can verify electronically.
This Tax Compliance PIN verification ensures that the individual sending funds abroad has met their tax obligations in South Africa. For expats who no longer have an active SARS tax profile, the process may involve applying for a SARS manual letter of compliance instead. This serves as official confirmation that their tax affairs have been reviewed and cleared. Both options help demonstrate that the correct compliance checks have been completed.
Read more: Your SARS Tax Compliance Status – what expats need to know.
Dividend tax and withholding tax on dividends in South Africa
If you receive income from South African shares, it is helpful to understand how dividend tax in South Africa works and what it means for expats earning dividend income from local investments.
Most dividends paid by South African companies are subject to dividend withholding tax, formally known as dividends tax. This is sometimes referred to as withholding tax on dividends in South Africa, because the tax is usually withheld before the dividend is paid to the shareholder.
In most cases, the company paying the dividend or a regulated intermediary deducts the tax before distributing the funds. The current dividend tax rate in South Africa is 20%. However, some investors may qualify for dividends tax exemptions in South Africa or reduced rates under a double taxation agreement between South Africa and the country where the shareholder lives.
For expats receiving dividends in South Africa, understanding the tax rules on dividend income is important. While the tax is typically withheld in South Africa, additional reporting or tax obligations may arise in the country where you now reside.
Why JSE dividends and other payments may face delays
One of the practical implications of the updated rules is that payments linked to JSE dividends or income from dividend-paying stocks in South Africa may sometimes take longer to reach overseas bank accounts.
The SARS AIT turnaround time can vary depending on the complexity of the taxpayer’s affairs and whether all documentation has been submitted correctly. If SARS needs to confirm tax residency history or review compliance records, the process may take additional time. Banks must also verify the required approvals before processing the transfer. While these checks can introduce delays, they are mainly administrative and can usually be managed with proper preparation.
Read more: SARS tax compliance status verification: how, when, why?
FinGlobal: cross-border financial and tax specialists
For many expats, investments back home remain a key part of long-term financial planning. That’s where FinGlobal can help. We provide a full suite of cross-border financial solutions for South Africans abroad. Whether handling your tax emigration or guiding you through the SARS AIT application process while verifying your tax residency status, or checking that your shares meet exchange control requirements, FinGlobal provides personalised support to make the process straightforward and stress-free.
By working with our experts, you can stay on top of SARS/SARB compliance rules and keep your South African investment income flowing with minimal disruption.
To find out more about FinGlobal’s trusted cross-border tax and financial services for South African expats living abroad, leave your contact details below, and we’ll be in touch soon!