The South African Revenue Service (SARS) has introduced new controls on the procedures used by resident individuals to transfer their funds overseas, according to Step.
Under the previous system, any individual could use their foreign investment allowance to transfer up to a total of ZAR10m (£420,000, $520,000, €487,000) a year abroad through an authorised dealer.
The tax compliance obligations were previously “minimal”, according to Step. The obligations could include obtaining a tax compliance status number according to whether the individual was investing abroad or emigrating.
The newly amended tax compliance status procedure now requires individuals to complete an approval international transfer (AIT) application to export capital funds abroad above their annual discretionary allowance of ZAR1m per year.
Applications have to be accompanied by a significant increase in disclosures and supporting documentation, says law firm Eversheds Sutherland.
The law firm added: “All AIT applications must submit all material that demonstrates the source of the capital to be invested (whether local or foreign) and a statement of assets and liabilities for the previous three years.”
The single discretionary allowance of ZAR1m per calendar year for each individual is still in force and the new procedure is not required when expatriating funds less than that threshold.
The measure is being put forward by the South African government as part of its efforts to be removed from ‘grey listing’ by the Financial Action Task Force (FATF).