South Africans moving large sums of money out of the country when they emigrate need to get approval from the South African Reserve Bank (SARB) to do so. With SARS also getting in on the process.<\/p>\n
Lovemore Ndlovu, the head of SARB engagement and ex-pat compliance at Tax Consulting SA, said that during or after emigration, the central bank is very involved with the process – especially with amounts above R10 million.<\/p>\n
“Currently, we’re not only seeing people leave the country for better prospects abroad but also a rise in those moving funds over R10 million offshore<\/strong>,” said Ndlovu. SARB approval is often needed for high amounts.<\/p>\n Oversight from the Reserve Bank is needed because South African citizens are required by law to pay income tax on their worldwide earnings and capital gains tax (CGT) on the disposal of both their local and foreign assets – even after they leave the country.<\/p>\n Therefore, they must formally cease to be a resident taxpayer by issuing the taxman with evidence of the intention to reside outside of South Africa permanently.<\/p>\n Once the South African Revenue Service (SARS) recognises them as non-resident taxpayers and issues them with a tax compliance status (TCS) PIN in respect of “emigration”, their Authorised Dealer (their own bank) may allow them to transfer up to R10 million out of the country \u2013 provided, of course, they are fully tax compliant and have a relevant TCS PIN, said Ndlovu.<\/p>\n “If they wish to transfer more than R10 million offshore, they will be subject to an additional verification process by SARS and, subsequently, must seek approval from SARB’s Financial Surveillance Department.”<\/p>\n “Furthermore, SARB, through its Financial Surveillance Department, is mandated with detecting and averting any money laundering tendencies,” Ndlovu added.<\/p>\n At this department, the taxpayer will face another round of questions and requirements.<\/p>\n They then return to their bank, which still has to follow its own processes before releasing the funds.<\/p>\n Subsequently, for any transaction going offshore, SARB will need a relevant tax compliance status PIN before it is cleared.<\/p>\n Ndlovu said this process could often be tedious and complex.<\/p>\n For those that have already ceased their tax residency, the procedure may involve them first dealing with SARS itself and then approach SARB for them to have everything necessary for the completion of the process.<\/p>\n Tax Consulting SA said that the departments have a high standard of scrutiny and various declarations and motivations should be drafted with meticulous detail to best support a case.<\/p>\n “If the explanations are too subjective, don’t make sense, or are noticeably written by a layperson, parties are more likely to reject the application to avoid risk,” the group said.<\/p>\n
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