Exchange Control Circular 3 of 2023

This circular proposes amendments to section B.2(J)(xii)(a) of the AD Manual, which deals with private individuals who cease to be residents for tax purposes, specifically individuals with blocked assets per a FinSurv directive given in terms of Exchange Control Regulation 4(2) pertaining to income and capital distributions abroad from South African inter vivos trusts. Whereas the section previously stated that such distributions may be transferred abroad, subject to the tax compliance status (TCS) process being completed by the trustees of the trust, the section now states that the transfer abroad is subject to the TCS process being completed by the private individual and/or beneficiaries of the trust.

Exchange Control Circular 4 of 2023

Section B.2(C) of the AD Manual deals with the foreign direct investment dispensation available to South African resident companies. In this circular, FinSurv amends section B.2(C)(i)(b) which stated that foreign currency denominated facilities may be extended by authorised dealers to South African companies for the financing of approved foreign direct investments. The section has been amended to now also state that in instances where the South African parent company wishes to directly issue a foreign denominated guarantee to cover the borrowing facilities of its authorised foreign subsidiary abroad and not through an authorised dealer, FinSurv approval will be required.

Exchange Control Circular 5 of 2023

In this circular the provisions of section I.3(B) in the AD Manual, dealing with borrowing abroad by residents, have been amended. Firstly, a new subsection has been added to section I.3(B)(iv)(a), which deals with the criteria that must be applied by authorised dealers when adjudicating applications for inward foreign loans and foreign trade finance facilities. Specifically, the new section I.3(B)(iv)(a) (hh) states that early repayments in respect of the inward foreign loan or foreign trade finance facilities may be effected offshore, provided that the relevant loans are fully drawn down and reported correctly on the Loan Reporting System, and that there are no anomalies on the Loan Reporting System. Simultaneously, section I.3(B)(v)(a)(ll) has been repealed, which stated that early capital redemptions may only take place where they have been approved by FinSurv.

Exchange Control Circular 6 of 2023

This circular contains the most substantial amendment to the AD Manual. It replaces the current section B.17 of the AD Manual, dealing with foreign currency holdings and other foreign assets of South African individuals. This section was amended in 2022 with the release of various circulars at the time of the 2022 Budget, but it has now been replaced in its entirety. In substance, the new section B.17 is quite similar to the previous version, but some of the interesting differences are:

• Section B.17(F), which deals with the disposal of legal foreign assets held by private individuals has been retained, but it now also states that where the authorised foreign asset is sold to a private individual with recourse to South Africa, the transfers in payment of the assets must be dealt with in terms of the R10 million and R1 million allowances.
• The same subsection also states that any sale of the authorised foreign assets to private individuals where payment will take place locally in rands resulting in no cross-border flow of funds other than change of ownership, must be referred to FinSurv and will also be subject to local tax disclosure as well as compliance by the relevant parties.
• Although lending of foreign assets has been provided for since the February 2022 amendments to section B.17, section B.17(H) now deals separately with the lending of legal foreign assets held by private individuals. One of the important changes in this regard, is that the new subsection states that the where the authorised foreign assets are lent to other residents for use abroad, such transactions must take place without any recourse to South Africa, and if there is recourse to South Africa, for example, local repayment in rands, FinSurv approval is required.
• Section B.17(H) now also states that where the authorised foreign assets are lent to other residents for use locally, section I.3(B) of the AD Manual must be adhered to.