UPDATED ADMINISTRATIVE REQUIREMENTS ON INCOME TRANSFERS
The Financial Surveillance Department of the South African Reserve Bank has issued Exchange Control Circular No. 15/2025, introducing new administrative requirements for income transfers made abroad to non-residents and individuals who have ceased to be South African tax residents (“former SA tax residents”).
Exchange control circulars issued by the Financial Surveillance Department outline the conditions, permissions, and limits applicable to foreign exchange transactions undertaken by Authorised Dealers (“ADs”) (registered South African banks), ADs with Limited Authority, and/or on behalf of their customers, as well as related administrative responsibilities.
In terms of the new Circular, ADs may allow the transfer of (i) dividends, (ii) directors’ fees, (iii) income from testamentary and inter vivos trusts, (iv) rental income, and (v) members’ fees, to non-residents and former SA tax residents, provided that the following is obtained from the South African Revenue Service (“SARS”):
- If the non-resident or former SA tax resident is not registered on the SARS database, a Manual Letter of Compliance – International Transfer (“MLC”), or;
- If the non-resident or former SA tax resident is registered on the SARS registered database, a Tax Compliance Status Pin Letter for Approval of International Transfers (“AIT”).
An individual would generally not be registered on the SARS database if they were never a registered taxpayer or if their tax number has been marked as inactive.
Both the MLC and the AIT are letters issued by SARS to confirm that there is no objection to the transfer of funds abroad. The difference lies in the process: the AIT is obtained electronically via eFiling, while the MLC is processed manually.
These administrative requirements must be complied with for each transaction where any of the above income types are transferred abroad.
Regarding the trust distributions, it must be confirmed that the beneficiary receiving the income is a non-resident or has ceased to be a South African tax resident. Confirmation may be provided by means of a foreign passport or a Notice of Non-Resident Tax Status issued by SARS.
For rental income transfers, the application must be accompanied by the AIT or MLC, a copy of the rental or rental pool agreement, and confirmation that the amount is reasonable in relation to the property value.
The Circular also introduces changes to the transfer of pension and/or annuity payments to non-residents and former SA tax residents. ADs may now transfer these payments, without the need for an annual TCS of good standing, if they are reflected or will be reflected on an IRP5/IT3(a) under the relevant SARS codes.
Evidence must be provided by the retirement fund, its administrator, or licensed insurer, in the form of the most recent IRP5/IT3(a) tax certificate; or a payment advice detailing the applicable tax codes.
Although these requirements may appear new, they primarily clarify the existing processes applicable to former SA tax residents and wish to transfer funds abroad, particularly as they no longer qualify for the R1 million Single Discretionary Allowance available to residents.
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