The South African Revenue Service (Sars) has made it harder for South Africans to send money abroad, says Jill Wilmans, the managing director of Currencies Direct South Africa, which specialises in foreign exchange payments.
Previously, if you wanted to invest more than R1 million but less than R10m offshore in a calendar year, Sars required a bank statement not older than three months, a statement of your assets and liabilities, and proof of the source of capital.
Now if you applying for tax clearance for a foreign investment allowance, Sars requires you to disclose information going back three years. This includes disclosing all your investments, loan accounts and distributions from local and foreign companies and trusts.
Wilmans says the change is causing major headaches. “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.”
Wilmans says it is tempting to assume that Sars is trying to make life difficult for well-off South Africans whom it believes are seeking shelter from political developments in this country.
She says that two years ago about half the applications processed by her company were from offshore clients wanting to convert euros, dollars or pounds into rands. “These were foreigners keen to set up home, even for a few months of the year, in South Africa. Currently, it’s about 70% outgoing and 30% incoming.”
Wilmans says political uncertainty has also motivated many citizens of the United States and European Union to diversify their asset base.
“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. Having to disclose three years of information is cumbersome, but it will make it much more difficult for individuals to send money offshore that has escaped the tax net.”