tax relief from SARS

Tax relief from SARS Picture: File.

Investing offshore? Take a look at these new SARS regulations

Strict new SARS regulations about investing offshore – while well-intentioned – could spell trouble in the long run, warn experts.

tax relief from SARS

Tax relief from SARS Picture: File.

In April 2023, the revenue service announced stricter new SARS regulations. The changes were clandestine, coming almost overnight and taking the financial sector by surprise, reports BizNews.

ALSO READ: SARS eFiling issues: Here’s what you do to fix the problem

The strict new SARS regulations are of particular relevance to South Africans wishing to take money offshore. They must also be contextualised within South Africa’s grey-listing by the Financial Action Task Force (FATF) earlier in the year.


SARS regulations.
Be aware of the stricter new SARS regulations on offshore investment. Photo: File

Of relevance to the new SARS regulations are low-interest foreign currency loans made by connected persons to trusts. Subject to donations tax, they now have a new methodology to calculate their rand value.

ALSO READ: 5 ways to file your income tax return

Similarly, under new SARS regulations, the requirements of emigrating for tax purposes and investing money offshore have been replaced by a new dynamic application. Known as Approval International Transfer (AIT), it is meant to strengthen legislative alignment with the SA Reserve Bank (SARB).

UPDATED: Where you’ll find SARS mobile tax units for August

However, experts say, while the new SARS regulations are well-intentioned, there’s a likelihood that AIT could backfire. And it could ultimately result in SARS collecting less tax revenue.


SARS regulations
It’s time to use a experienced forex trader to navigate the new SARS regulations. Picture: File.

In the past, if you wanted to move money offshore for emigration purposes you had to obtain an emigration-specific Tax Compliance Status (TCS) Pin from SARS. If you were moving money outside the country for investment purposes, meanwhile, you needed a Foreign Investment Allowance (FIA) TCS Pin.

ALSO READ: Here are 10 must-knows to file your TAX return

You were able to move R10 million a year out of the country without restrictions. Not to mention the R1 million you can take out without prior approval. With AIT, the same amount can be removed, but the new SARS regulations are a great deal more stringent.


SARS regulations
Picture: File

Unfortunately, the new SARS regulations – including the information and documentation required to get an AIT – are far more complex than they need to be. For example, the requirements for taxpayers to list local and foreign assets and liabilities could result in lengthy delays.

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Time is money, as the saying goes. And even if an investor wants to legitimately take their money offshore, they’ll struggle to do so. Many people may want to grow a healthy offshore nest egg in stable economies before building a retirement property or supplement their pension. This will no longer be so easy.


SARS regulations
Image: Supplied

Consequently, this will rob South Africa not just of money that would otherwise go into the economy but of broader tax revenue, too. However, while there’s little that ordinary people can do when it comes to SARS regulations, they can still consult with an experience forex provider.

ALSO READ: Important changes to SARS payment procedure

The experts at Future Forex, for instance, use Artificial Intelligence (AI) to help complete the complex forms. The company also offers free tax-clearance applications. In time, SARS AIT requirements may become more user-friendly but, for now, you’re better off working with a company that can minimise the impact of SARS’ regulations.