SARS game changer for offshore investments

Jill Wilmans

Sending money out of South Africa has just become a lot more daunting for high net worth individuals although you wouldn’t think it from a reading of the Sunday newspapers, which talk lightly of well-placed individuals shipping billions of Rands out of the country at the drop of the proverbial hat. Gone un-noticed by the mainstream media however is a recent substantial change in SARS’ requirements for tax clearance approval needed for foreign investment allowance (FIA) applications.

For those who have a phobia about form-filling and bureaucracy the process might have seemed daunting enough ahead of the recent changes. Previously if you wanted to send more than R1 million a year (but less than R10 million), SARS required a recent bank statement, a statement of assets and liabilities and proof of the source of capital to be invested offshore. Collecting all that information was just the start, then came the difficult part; you had to engage with SARS.

That already daunting process has just been ratcheted up several notches. SARS now wants three years of information. The rule change has only been in place for a few weeks but it is already causing major headaches. Jill Wilmans managing director of Currencies Direct South Africa, says the change has significantly slowed down the process. “Prior to the introduction of these changes, it used to take us a few days to get tax clearance for our clients and have the funds ready to transfer into a foreign currency account, now it’s taking three to four weeks.”

The absence of any discussion in the mainstream media and the fact SARS has not made a fuss about the change, including not giving notice to the industry, has resulted in some confusion but Wilmans says although her clients are irritated by the delay, they generally understand once it’s explained.

She said there’s a temptation to assume SARS is just trying to make life difficult for South Africans with resources who are deemed to be seeking shelter from a chilling political situation. “There’s an unavoidable political dimension; the reality is the number of applications has increased 100% over the last two years and at an even higher rate in the last six months.” But a longer term perspective presents a brighter picture.

Wilmans says up to around two years ago about 50% of the applications her company processed were from offshore clients wanting to convert Euros, dollars or pounds into Rands. These were foreigners keen to set up home, even for just a few months of the year, in South Africa. Currently it’s about 70% outgoing and 30% incoming. “I think South Africans tend to think the flow is entirely and overwhelmingly one way but that’s not so.

The current public discourse in South Africa is quite grim but large numbers of Americans are having similar discussions about their politicians and increasing numbers of EU citizens are looking to diversify their asset base.” Wilmans says that while South Africans tend to assume it is the utterances of President Zuma that most determines the international value of their Rand assets, the reality is that it’s more likely to be influenced by a tweet from US President Trump or an ill-judged comment from a putative EU leader. “We’re living in a turbulent global village and we often forget it was the post-1994 government that gave us the ability to manage some of that turbulence by allowing individuals to set up offshore accounts.”

Wilmans discourages SARS bashing. While the tax authorities may or may not be concerned about the recent significant increase in “outflow” applications, they have a duty to take whatever action they deem necessary to ensure all the funds are tax compliant. “Having to disclose three years of information is certainly cumbersome but it will make it much more difficult for individuals, no matter how well-placed, to send money offshore that has escaped the tax net.”

For those who want to diversify their asset base, Currencies Direct not only makes the process far less daunting, but also cheaper. They will secure the tax clearance certificate and within 24 hours can open up a forex account. “There are no set up costs, no monthly fees,

and trading at the right time is crucial to maximizing the value of the transaction.” says Wilmans. Clients have sight of the process throughout and can elect at what rate Currencies Direct convert the Rands. South African Reserve Bank regulations also mean the funds are at all times in an account in the client’s name.

While Currencies Direct is not able to change the market, political uncertainties or SARS there is something comforting about the reassurance they are offering to their clients. Helping navigate through, what seems like, a daunting journey sending funds out of South Africa at zero cost provides a much needed leading light.


About Currencies Direct: one of the pioneering non-bank foreign exchange payment specialists. With 20 years of experience and over 359k clients globally, Currencies Direct provides a unique approach to foreign exchange services and adopts a premier private banking philosophy for all international transfer requirements.
Our international footprint means we are governed globally by the Financial Conduct Authority as an Electronic Money Institution. Our FCA Firm Reference number is 900669. In addition, we hold certificate of registration with the International Money Laundering Regulator (12132225). In South Africa we are an approved financial services provider (43493) and are an approved Treasury Outsource Company by the SARB, acting in accordance with all current exchange control rulings.
Offering an all-inclusive exchange rate that leverages off global flows in order to secure the most competitive rates, Currencies Direct combines market knowledge, precision timing and no unnecessary costs, ensuring that clients’ expectations are exceeded for/with every transfer.

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