Significant hassle for Taxpayers wishing to withdraw their funds from South Africa

South Africans who want to transfer money abroad find it difficult to abide with the regulations on foreign transfers set forth by the South African Reserve Bank (SARB) and the South African Revenue Service (SARS).

Amidst the unsettling economic climate marked by slow development, failing state-owned enterprises, and elevated joblessness, some affluent South Africans are seeking to relocate themselves or their assets abroad.

Nonetheless, you must pay taxes on your foreign income since you are a tax resident of South Africa.
The most frequent query from guests at a recent Henley roadshow was, “How do we get our money out of South Africa?”

Henley partner Tax Consulting SA noted that this pattern was very different from previous years since SARS imposed a new mechanism known as the Approval for International Transfer (AIT) for South Africans wishing to transfer money overseas.

Tax Consulting SA stated that many advisers and clients are finding it difficult to comply with SARS’s increased tax treatment of overseas transfers, even though the new, streamlined approach was launched in April 2023.

Compliance issues

SARS believed that the “upgrade” to its approval procedure for money movements made sense, especially in the case of overseas assets.

In addition to taxpayers who do not reside in South Africa, the AIT Pin is now necessary for residents who want to authorize financial transfers outside of the country that total more than the R1 million Single Discretionary Allowance (SDA).

Practically speaking, this would mean that in order to be accepted into any program offered for citizenship or residency (golden visa), candidates would need to obtain an AIT, according to Tax Consulting SA.
We have discovered that SARS is rather quick to issue the desired AIT Pin when handled correctly—that is, after doing a reasonability study on the monies to be moved and submitting all necessary supporting documentation.

Nonetheless, the South African Reserve Bank (SARB) must get additional clearance in cases when the required AIT surpasses R10 million (after the R1 million SDA).

“This compliance level is what many High-Net-Worth Individuals run into when they don’t have the right channels.”