Following the Budget Speech in February 2022, and the relaxation of loop structures in January 2021, a number of Exchange Control circulars were subsequently issued by the South African Reserve Bank (SARB).
The circulars included the following relaxations:
- The transfer of dual‐listed domestic securities from the local exchange to a recognised offshore exchange in line with the individual Single Discretionary Allowance (SDA) and/or the individual foreign investment allowance (FIA) of R10m, subject to tax clearance. Our understanding is that this circular applies regardless if the JSE is the primary listing or not;
- Foreign assets inherited from a South African estate may be retained offshore by the heir without having to apply for exemption from the SARB;
- Residents may donate, lend or sell legitimate foreign assets held to other SA residents, subject to local tax disclosure and compliance (effective from 23 February 2022);
- SA resident individuals are allowed under a special dispensation to invest offshore in excess of R10m held by an offshore trust subject to SARS verification and SARB approval.
Although this is encouraging, meticulous recordkeeping would be vital. Should a South African exchange control resident want to apply for or utilise any of the circulars, supporting and / or source documents should be readily available in the event of a SARB audit. In addition, the exchange control resident should also be aware and prepared for annual reporting to the SARB via his / her authorised dealer.
As with all exchange control matters, authorised dealers may apply their discretion with the practical application of each circular. The application process and requirements may therefore differ from one authorised dealer to another. We therefore recommend obtaining exchange control advice should you consider any of the circulars issued. As a final comment, tax disclosures and compliance are often mentioned as conditions relating to the exchange control circulars. It is therefore vital to ensure that specialised tax advice is obtained in addition to exchange control advice to ensure that you comply with the required disclosures and requirements.
Should you have any questions relating to this article, please contact Marteen Michau at marteen@fidelisvox.co.za or Suzanne Smit at suzanne@fidelisvox.co.za.
This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)