The transition from the old emigration regime to the current regime - ceasing of tax residency, came with some relief. However, there were some silent changes that went unnoticed. 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 offshore.
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 cent 1.
The Limited Relief
It comes as a relief that one can still use their emigration TCS PIN to request for offshore transfers provided SARS approved funds to be externalised under 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
It is worth mentioning that it’s not always plain sailing when applying for an FIA TCS PIN. Where funds requested to be transferred are in the excess of R10-million, SARS performs their internal hygiene and completeness checks. The source of funds is reviewed for tax compliance, as well as all entities connected to the taxpayer.
It should be noted that the process to determine whether the application will be approved includes the following as well:
- Perform hygiene check to assess if the taxpayers’ administrative requirements have been met, such as when there are no outstanding returns or monies
- Perform completeness check to assess if the taxpayer poses a tax risk and may have omitted, or incorrectly unaccounted for, activities or transactions
- Review if the source of funds, and related entities, have correctly accounted for taxes due
Optimise Your Forex Transfers
You now have a lasting solution for the forex woes you face as an expat. You can obtain an exclusive forex transfer account through an approved provider to manage your transfers optimally. There are numerous 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 comes with competitive exchange rates and most importantly a convenient and easy to use platform.
There are many challenges for those working abroad or in the process of doing a financial emigration. The slightest delay or legislative change can quickly become a costly exercise, which defeats the purpose of your work engagement or emigration. Be sure to engage with an expert to guide you through the steps, make you aware of the pitfalls and risks, who is well versed on the latest law changes and can manage the process for you as seamless as possible.
Written by Lovemore Ndlovu, SARS and Exchange Control Specialist at Tax Consulting SA; and Marisa Jacobs, Managing Director at Africorp Treasury