The amendments, communicated in Exchange Control Circular No. 15/2025, apply to locally sourced income such as rental income, trust distributions, director’s fees, royalties, dividends and pension or annuity payments for South Africans living abroad.
The aim is to improve oversight and traceability, but the revised framework also brings significantly more stringent documentation and verification requirements for Authorised Dealers, corporate clients, and taxpayers when it comes to transferring South African sourced income abroad.
SARS Approval Now Required for All Offshore Income Transfers for Non-Residents
The updates are now reflected in the Authorised Dealer Manual.
Under the new framework, income transfers made by non-residents or individuals who have ceased to be South African tax residents will now require SARS verification before any funds can be transferred abroad.
Specifically, Authorised Dealers must be furnished with either an Approval International Transfer (AIT) Tax Compliance Status (TCS) PIN or a Manual Letter of Compliance (MLC) from SARS prior to processing.
This represents a major departure from previous practice, where such income transfers could proceed without an AIT or MLC, adding considerable administrative complexity particularly for recurring income such as salaries or director’s fees still earned in the Republic.
Some banks may allow recurring payments once initial documentation (such as IRP5/IT3(a) forms) is verified, but this remains subject to internal policy and SARS confirmation.
Expanded Requirements for Retirement and Pension Fund Transfers
Changes relating to retirement and pension income are among the most notable. While some procedural relief has been introduced, the documentary burden has increased:
- Eligibility to Transfer
Only pensions and/or annuities paid by registered retirement funds or licensed insurers may now be transferred offshore. Payments from unregistered entities are excluded.
- Annual TCS of Good Standing Not Required
Non-residents and individuals who have ceased South African tax residency may now transfer their compulsory annuities (including living annuities) and pensions including any late payment interest abroad without obtaining an annual Good Standing TCS PIN.
- Verification via Tax Codes
The qualifying pension or annuity payments must be recorded on an IRP5/IT3(a) under specific SARS tax codes: 3602/3652
- Supporting Documentation
Authorised Dealers must be provided with evidence from the registered fund, administrator, or insurer. Acceptable documents include:
- The most recent IRP5/IT3(a) tax certificate;
- A payment advice confirming the tax code for a new annuity or pension; or
- A payment advice showing the tax codes under which income will be reported.
- Timing of Confirmation
Verification is required only at the inception of a new contract or before the first payment of the following tax year for existing contracts. Once confirmed, subsequent transfers may proceed without repeated documentation.
Requirements for Rental Income Transfers
Transferring rental income from South African property – whether fixed, moveable, or part of a rental pool – are also subject to enhanced scrutiny and approval.
Authorised Dealers may allow such transfers only if the following conditions are met:
- The application is accompanied by a copy of the rental or rental pool agreement.
- The client provides written confirmation that the rental amount is reasonable relative to the value of the property.
- One of the following SARS compliance documents must be obtained:
- a Manual Letter of Compliance – International Transfer (MLC) for beneficiaries not registered on the SARS database; or
- an AIT TCS PIN for beneficiaries registered on the SARS database.
In practical terms, this means that non-residents receiving ongoing rental income will need to apply for SARS compliance verification each time funds are remitted abroad. For property investors with monthly rental flows, this introduces a repetitive and time-consuming compliance process.
Implications for Corporates and Financial Institutions
For corporates managing cross-border payrolls, expatriate compensation, or offshore remittances, the new rules will require greater coordination between tax, compliance, and treasury functions.
Authorised Dealers will also bear a heavier administrative responsibility to verify documentation and ensure SARS validation is obtained before processing transactions, potentially extending turnaround times for their customers.
Outlook and Advisory Note
While Exchange Control changes aim to close compliance gaps and strengthen the regulatory link between SARB and SARS, it also makes the process of transferring funds abroad more stringent and administratively demanding.
The changes signal SARB’s firm stance on tightening exchange control compliance, especially concerning income, rental, and pension-related transfers.
To avoid delays or interruptions in offshore remittances, affected individuals and corporate clients should work with professionals who can ensure tax obligations are up to date, obtain the required SARS documentation and who understand exactly what clients need for each type of source of funds to transfer income abroad.
