South Africa’s regulatory framework governing cross-border payments has shifted materially, placing the South African Revenue Service at the centre of approving offshore directors’ fees and introducing new compliance hurdles for non-resident board members. Recent amendments published by the South African Reserve Bank formally designate SARS as the primary compliance authority before such income can be externalised.
The change follows revisions to the Authorised Dealer Manual, which governs how banks process foreign exchange transactions. According to tax specialists cited in the original report, directors’ fees are now treated as a distinct and fully regulated category of outward payment. Transfers may only proceed once both tax compliance and exchange control conditions have been satisfied in a prescribed sequence.
The amendments stem from changes to Section B.3(B)(iii) of the Authorised Dealer Manual. Under the revised framework, banks may process offshore remittances of directors’ fees only if a board resolution confirms the amount payable, the director’s non-resident tax status is established, and SARS approval has been secured. This codifies what was previously handled with greater administrative flexibility.
Tax practitioners warn that the practical consequences are already emerging. Directors’ fees are reportedly being held locally pending confirmation from SARS, with delays of six weeks or longer. For non-executive directors remunerated quarterly, this introduces operational strain, particularly where income flows are time-sensitive.
The compliance pathway depends on the director’s registration status with SARS. Where a director remains registered on eFiling, an Approval for International Transfer PIN is required. The AIT system, introduced in April 2023, has now been integrated into the broader exchange control framework. Where a director is not registered, an International Transfer MLC approval must be obtained instead. In both cases, authorised dealers may not release funds without confirmation of tax compliance.
READ – SARS Tightens Grip on Trust Compliance
The AIT process itself is not immediate. Practitioners note that approvals can exceed six weeks, and SARS generally requires proof of available liquid funds before issuing clearance, limiting the ability to apply in advance of scheduled payments. It also remains unclear whether a single approval may cover multiple remittances or whether each transaction will require a fresh PIN. Market participants suggest banks may interpret implementation requirements differently, adding further uncertainty.
The tightening comes as South Africa continues to strengthen oversight of capital flows. According to the South African Reserve Bank’s latest Quarterly Bulletin, net capital outflows have remained volatile amid global monetary tightening and currency pressure, reinforcing regulatory sensitivity around outward payments. At the same time, SARS has intensified enforcement and compliance drives in recent years, reporting record gross tax collections exceeding R2 trillion in the 2024/25 fiscal year, as detailed in its annual performance updates.
Analysts note that the formal alignment between tax compliance and exchange control reflects a broader policy objective of integrating revenue administration with financial surveillance. According to the South African Revenue Service’s published guidance on international transfers, outward payments linked to income streams are increasingly scrutinised to prevent base erosion and ensure tax residency status is properly documented.
For non-resident non-executive directors serving on South African boards, the result is a more structured and potentially slower process for receiving offshore remuneration. Companies paying directors’ fees abroad are also required to conduct pre-payment compliance reviews to avoid disruptions.
The revised framework effectively removes any informal treatment of directors’ fees within broader income categories. Offshore transfers now depend on documented tax clearance, validated residency status and bank-level verification before funds can leave the country. As regulatory coordination deepens, the administration of cross-border income has shifted from routine processing to controlled compliance, placing SARS at the centre of the approval chain.
READ – SARS Intensifies Crackdown on Tax Evaders