Exchange control modernisation

Of these anticipated changes, only some have trickled through. For example, following the introduction of amendments to certain provisions of the Income Tax Act 58 of 1962, the prohibition on loop structures has been completely abolished. A further example is the removal of the distinction between emigrants and residents.

In the 2022 Budget Speech, the National Treasury has again confirmed its commitment to modernisation, and made several proposals.

In respect of individuals:

• The export of dual listed securities to a recognised foreign securities exchange will be permitted subject to allowance limitations.
• Residents may use their discretionary allowance to participate in online foreign exchange trading, but may not use credit or debit cards.
• Residents may receive and retain gifts from non-residents offshore (no repatriation required).
• Residents may lend or dispose of authorised foreign assets held offshore to other residents (but this will not apply retrospectively and past irregular transactions must be regularised).
• Residents may transfer more than R10 million per year to offshore trusts (subject to tax and reporting requirements).
• Authorised dealers may, on a once-off basis, remit abroad the remaining cash balances (of up to R100,000 in total) of people who have ceased to be residents for tax purposes, without reference to the South African Revenue Service.

In respect of companies:

• Debt securities referencing foreign assets listed in a South African stock exchange will remain classified as foreign.
• The foreign direct investment limit for companies investing funds offshore will increase from R1 billion to R5 billion, provided the stipulated investment conditions, tax obligations and reporting requirements are met. Excess income or profits of offshore branches and offices of South African firms may be retained offshore, subject to annual reporting.
• Authorised dealers may process transfers from a parent company to a domestic treasury management company up to a maximum of R5 billion (an increase from R3 billion) per calendar year for listed entities, and up to R3 billion (an increase from R2 billion) per calendar year for unlisted entities. Funds transferred under this dispensation may be used for new investments, expansions and other transactions of a capital nature.