The transition from the old emigration regime to the current regime ‒ ceasing of tax residency ‒ came with some relief. However, there were some changes that went largely unnoticed.

By Lovemore Ndlovu, SARS and Exchange Control Specialist at Tax Consulting SA, and Marisa Jacobs, Managing Director at Africorp Treasury.

The most notable change has been the requirement of a SARS Tax Compliance Status (TCS) pin for every capital transfer a non-resident/non-tax resident makes to an offshore account.

The Financial Surveillance Department (FinSurv) released an Exchange Control Circular (No. 8/2021) last year which shed more light on this change.

In summary, previously the provision has been that individuals who formally emigrate were allowed to transfer up to R10 million, or R20 million for a family unit, without the requirement for a TCS pin. Going forward, a TCS pin would be required from the first cent.

It comes as a relief that one can still use one’s emigration TCS pin when requesting offshore transfers, provided the funds to be externalised fall under one’s foreign investment capital allowance.

This relief is however ‘limited’ as upon the expiry of the emigration TCS pin, one must now apply for a Foreign Investment Allowance (FIA) TCS pin for every transfer.

The sticky part

But it’s not always plain sailing when applying for an FIA TCS pin. Where the funds requested to be transferred come to more than R10 million, SARS will perform their internal hygiene and completeness checks. The source of funds is reviewed for tax compliance, and SARS looks at all entities connected to the taxpayer.

SARS will also do the following when deciding whether the application will be approved:

• Check that the taxpayer’s administrative requirements have been met, for example, checking that there are no outstanding returns and that no money is opwed to SARS;
• Assess whether the taxpayer poses a tax risk and may have omitted, or incorrectly accounted for, activities or transactions;
• Review the source of funds;
• Check that related entities have correctly accounted for taxes due.

Optimise your forex transfers

To help lessen the forex woes an expat may face, you can now obtain a forex transfer account through an approved provider to optimally manage your transfers.

There are several options available, however it is worth looking at an account specifically tailored for forex transfers that can be opened and closed remotely without any hassles. This account should offer competitive exchange rates and most importantly, have a convenient and easy-to-use platform.

There are many challenges for those working abroad or who are in the process of financial emigration. The slightest delay or legislative change can quickly become a costly exercise, which defeats the purpose of your work engagement or emigration.

It can be helpful to engage with an expert who is well versed on the latest law changes, to guide you through the steps, make you aware of the pitfalls and risks, and manage the process for you so that it is as seamless as possible.

This post was based on a press release issued by Tax Consulting SA.