The Institute for International Tax and Finance welcomes the South African Reserve Bank’s (SARB) decision to partially reverse its controversial new exchange control requirements for non-residents. However, the Institute warns that the continued restrictions on rental income and directors’ fees remain unjustified and continue to deter foreign investment and undermine South Africa’s competitiveness.
Revised guidance
Following sustained criticism from market participants and investor advocacy groups, including the Institute for International Tax and Finance, SARB’s Financial Surveillance Department issued revised guidance last week that partially rolled back the stringent requirements introduced in October 2025.
Read – SARB Tightens Excon Rules for Non-Residents
Under the revised framework, non-resident entities will no longer be required to obtain an application for international transfer (AIT) tax compliance PIN from SARS for income transfers. Additionally, dividends from listed companies and interest from regulated financial institutions can now be transferred to non-resident individuals without requiring tax clearance.
“This is a positive development that addresses some of the most egregious aspects of the October changes,” said Michael Kransdorff, Director of the Institute for International Tax and Finance. “SARB deserves credit for recognising the legitimate concerns raised by the investment community and for taking corrective action.”
Significant problems remain
However, significant problems remain. Under the revised framework, non-resident individuals must still obtain AITs from SARS in respect of certain categories of income, most notably:
* Rental income – requiring an AIT PIN from the non-resident beneficiary
* Directors’ fees – requiring either a manual letter of compliance or an AIT PIN from the beneficiary
* Members’ fees – requiring either a manual letter of compliance or an AIT PIN from the beneficiary
In addition, various categories of income now require tax compliance status (TCS) certificates of good standing from the South African payer, including dividends from unlisted companies, interest from unregulated entities, and trust distributions.
“The continued discrimination against rental income and directors’ fees is arbitrary, economically harmful, and administratively unjustifiable,” Kransdorff said. “Why should a non-resident earning rental income face weeks or months of bureaucratic delays in accessing funds, while a non-resident earning interest or consulting fees can remit income immediately? This distinction has no rational policy basis.”
The treatment of directors’ fees is particularly difficult to defend. In most cases, PAYE is already withheld at source by the South African company, ensuring that SARS has collected the tax before the funds are remitted.
“SARS has already collected their taxes by withholding PAYE, yet non-resident directors must still endure the AIT process to access their net fees,” Kransdorff noted. “There is no additional tax risk to mitigate once PAYE has been withheld at source. This is pure bureaucracy serving no revenue protection purpose.”
No de minimis threshold for non-residents
The most glaring inequity in the current framework is the complete absence of a de minimis threshold for non-residents. South African residents benefit from a R1 million annual single discretionary allowance (SDA) that allows them to remit funds abroad without SARS tax clearance. No equivalent protection exists for non-residents.
As a result, a non-resident property investor earning R250,000 per year in rental income faces the same onerous AIT requirements as someone earning R2.5 million — including extensive documentation, SARS processing times of at least 21 business days (often longer in practice), and professional compliance costs.
“Few peer jurisdictions impose clearance requirements on small, routine income flows to non-residents,” Kransdorff said. “The absence of an annual allowance for non-residents is fundamentally unfair and creates a hostile investment environment for individuals who cease to be South African tax residents but retain legitimate investments in South Africa.”
Property investor trap
The practical consequences of the revised rules are severe for thousands of South Africans who have emigrated but retained property in South Africa, relying on rental income to support themselves abroad.
Under the current framework, an emigrant living in London, Sydney, or Dubai who receives monthly rental income from their South African property must apply for AIT clearance before remitting those funds. Crucially, the AIT process requires proof that the funds are already available in a South African bank account before approval for transfer is granted.
“This creates a structurally impossible situation,” Kransdorff explained. “An emigrant receiving monthly rental income cannot access those funds for weeks while SARS processes the AIT. If they rely on that income for overseas living expenses, they face recurring cash-flow crises. The inevitable result will be forced asset disposals — exactly the opposite of what the South African economy needs.”
Suggested solutions
The Institute for International Tax and Finance calls on SARB and the National Treasury to complete the reform process by establishing genuine parity between residents and non-residents:
1. Introduce a R1 million annual single discretionary allowance for non-residents
Non-resident individuals should be eligible for the same R1 million annual allowance as residents for remitting funds offshore without tax clearance. This would:
* Remove bureaucratic barriers for smaller investors
* Reduce administrative pressure on SARS
* Signal that South Africa wants emigrants to retain assets and capital ties in the country
2. Eliminate income-type discrimination
If tax compliance checks are required above the R1 million threshold, they should apply consistently across income categories. The current distinction between rental income (AIT required) and interest income (no AIT required), or directors’ remuneration (AIT required) and consulting fees (no AIT required), lacks any coherent policy justification.
3. Streamline the AIT process
For amounts exceeding the R1 million threshold but below R10 million, SARS should commit to:
* Maximum seven-day turnaround times
* Simplified and proportionate supporting documentation requirements
Kransdorff concludes, “The partial retreat shows that SARB recognises the damage caused by the October changes. But the job is only half done. Rental income and directors’ fees should be treated the same as other income streams. Non-residents deserve the same annual discretionary allowance as residents. South Africa deserves a rational, investor-friendly exchange control framework.”
“The Institute for International Tax and Finance will continue to advocate for these essential reforms until true parity is achieved between residents and non-residents. Our country’s economic future will be enhanced by getting this right.”