Exchange Control

All foreign exchange transactions in South Africa are subject to exchange control regulations, which are governed by the South African Reserve Bank. Here are the main rules in place for South African individuals wanting to invest overseas:

• South African residents may as at December 2012 invest R 4 million per calendar year abroad in terms of their foreign capital allowance in terms of Section B.2(B)(i) of the prevailing Exchange Control Rulings, which requires them to complete the necessary form(s) (eg.M.P.1423) in duplicate and produce a valid Tax Clearance Certificate (in respect of foreign investments) and their green bar-coded identity book. A person has to be over the age of 18 years. These investments may also be held in F.C. Accounts with Authorised Dealers. Authorised Dealers are advised that the green bar-coded South African Identity Document is the only acceptable document proving residency in the Republic.
• A duly electronically completed “TAX CLEARANCE CERTIFICATE (IN RESPECT OF FOREIGN INVESTMENTS)” issued by the South African Revenue Services (“SARS”) bearing the SARS logo and specific background watermark must be presented to the branch, prior to authorising the transaction. No transfer may be affected unless the Tax Clearance Certificate bearing the date is viewed. Authorised Dealers must ensure that the amount to be transferred does not exceed the amount reflected on the certificate. Since the Tax Clearance Certificate is specifically dated, such certificate may only be regarded as valid for a period of 12 months from the date reflected thereon.
• In addition to the above, clients may now utilise their single discretionary allowance for investment purposes up to R 1 million per calendar year without having to produce a tax clearance certificate, but need to provide their income tax reference number when completing the necessary form(s) (eg. M.P.1423).
• Private individuals who do not have any of the tax reference numbers referred to on the relevant form(s) (eg. M.P.1423) will have to register at their local branch of SARS.

Note: it is your responsibility to ensure that the necessary exchange control or regulatory authority approvals, in force in your country of residence, are in place prior to commencement of offshore trading.

Source:www.reservebank.co.za