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South Africa: Budget Speech 2022 – Exchange control proposals

23 February 2022
– 5 Minute Read



Individuals are now permitted to export dual listed domestic securities to a foreign recognised exchange (i.e. inward listed shares traded on the JSE can be moved to a foreign exchange) using their ZAR 1 million annual discretionary allowance or ZAR 10 million foreign capital allowance, provided this is placed on record with the individual’s bank (i.e. authorised dealer). 

Individuals should be mindful of the provisions of section K that were introduced from 1 March 2021, which will deem these securities to be sold for market value on the date of transfer to the foreign exchange and for any gains calculated to be taxed at that time.

Individuals may use their single discretionary allowances to participate in online foreign exchange trading activities (but not using credit or debit cards).  It is questionable as to whether this is a relaxation or simply a confirmation that such activity is permissible.

Individuals may now receive and retain gifts from non-residents offshore.  Of course, South Africa resident individuals have always been able to receive gifts from non-residents, however they were not permitted to retain these gifts offshore without SARB specific approval. 

Residents may lend or dispose of authorised foreign assets held offshore to other South African residents.  This relaxation will require further clarity. For example, if a South Africa resident acquires a foreign asset from another South Africa resident and pays for the asset in Rands into a  South African bank account, would this be permitted and what reporting obligations would the purchaser of the asset have? This dispensation is not retrospective in its application.  Individuals who have previously entered into such arrangements without SARB approval are cautioned to regularise these.

While individuals have been permitted to apply for permission to externalise more than their annual ZAR 11 million allowances (being the aggregate of the ZAR 1 million discretionary allowance and the ZAR 10 million foreign capital allowance), they were not permitted to invest amounts exceeding ZAR 11 million through foreign trust structures. This prohibition has now been relaxed. Of course, the tax and reporting requirements must be complied with to enable the export of capital from South Africa above the ZAR 1 million discretionary allowance.

Authorised dealers may, on a once‐off basis, transfer offshore the remaining cash balances (of up to ZAR 100 000 in total) of people who have ceased to be residents for tax purposes, without referring the matter to SARS. This is most welcome, although the amount is ridiculously low) as, currently, emigrants lose the ability to extract cash annually through the annual ZAR 1 million discretionary allowance.  


In the 2020 Medium Term Budget Policy Statement, the National Treasury announced that it would consider reclassifying all debt securities referencing foreign assets that are inward‐listed on local stock exchanges as domestic assets. 

Debt securities are classified as domestic or foreign, depending on whether they are linked to domestic or foreign companies.  If they are classified as domestic, it means that South Africa residents (including institutional investors) can freely invest in these instruments without marking these investments off against their offshore allowance limits.

In this regard, SARB issued circular 15/2020 and then almost immediately retracted it as it felt further consideration of the matter was needed.  SARB has now confirmed, after public consultation, that all debt securities referencing foreign assets listed on South African stock exchanges will remain classified as foreign.  This is no doubt a disappointment for institutional investors that will be subject to foreign investment limits on such products.

Companies can now apply to their authorised dealers (being their local banks) for permission to invest up to ZAR 5 billion (previously ZAR 1 billion) in offshore assets, provided they comply with the standard foreign investment rules and annual reporting requirements.

Excess income or profits of offshore branches and offices of South African firms may be retained offshore.   Annual SARB reporting must be undertaken. 

Domestic treasury companies

South African companies can now transfer to their domestic treasury management companies up ZAR 5 billion (previously ZAR 3 billion) per calendar year for listed companies and up to ZAR 3 billion (previously ZAR 2 billion) per calendar year for unlisted companies. Funds transferred under this dispensation may be used for new investments, expansions as well as other transactions of a capital nature.

Institutional Investors

The offshore limit for all insurance, retirement and savings funds is harmonised at 45% inclusive of the 10% African allowance. These limits were previously capped at 30% or 40% depending on the profile of the institutional investor.

Institutional investors may open foreign‐currency accounts with authorised dealers for funding purposes and to accept foreign‐currency deposits from the disinvestment proceeds of foreign assets, pending the reinvestment of the funds offshore.

Crypto assets

The Intergovernmental Working Group (IFWG) continues to work with various stakeholders to bring crypto assets into the regulatory framework, including the exchange control regime (refer to their paper issued in June 2021 for details of their intended changes).