The Financial Surveillance Department of the South African Reserve Bank (“the FinSurv”) recently issued circulars to address the exchange control reforms announced in the Minister of Finance’s 2022 Budget Speech. In summary, those reforms are as follow:
- Private individuals require a confirmation letter and/or approval letter from FinSurv to transfer multi-listed domestic securities to a foreign securities register in a jurisdiction where such securities are listed, subject to tax compliance.
- Private individuals may only fund online international trading activities (which include trading global currencies against each other, trading a contract for differences, trading commodities including crypto currencies, and trading foreign indices) in terms of the single discretionary and/or foreign capital allowance by transferring funds via EFT to their foreign currency accounts.
- South African debit, credit, or virtual cards may not be used to fund any international trading accounts, including crypto currency trading accounts.
- With effect from 23 February 2022, residents may donate, lend and/or dispose of authorised foreign assets to other South African residents, subject to both parties’ local tax disclosure and compliance.
- Any foreign asset received by a resident from a non-resident as a gift or donation on or after 23 February 2022 is exempt from Exchange Control Regulations 6 and 7, subject to local tax disclosure and compliance.
- FinSurv confirms that they will consider applications by private individuals who wish to invest, in excess of the R10 million foreign investment allowance limit, in different asset classes via a foreign domiciled and registered trust.
- South African companies’ foreign direct investment limit increases from R1 billion to R5 billion per calendar year, provided the prevailing investment conditions, tax obligations, and reporting requirements are met.
- The transfers limit for the parent company to a domestic treasury management company increases from R3 billion to R5 billion per calendar year for listed entities and R2 billion R3 billion per calendar year for unlisted entities.
- Private individuals who ceased to be residents of South Africa for tax purposes and have a total remaining balance not exceeding R100,000 may remit the remaining cash balance, on a once-off basis, without reference to SARS. Private individuals must obtain a TCS for foreign investment allowance (FIA) letter to remit remaining assets abroad in all other cases.