The hidden SARS struggle facing South African expats abroad
South Africans living abroad or those who have ceased tax residency will now face stricter controls when transferring income
Image: Timothy Bernard / Independent Newspapers
South Africans based overseas, who are considered to be former tax residents, will now encounter tighter oversight when moving South African income abroad.
This is after the South African Reserve Bank (SARB) introduced new rules towards the end of 2025, which require all cross-border transfers of South African-sourced income to be cleared by the South African Revenue Service (SARS) before any funds can leave the country.
The measures cover pensions, rental income, dividends, directors’ fees, and other locally earned income.
Lovemore Ndlovu, Head of SARB Engagement and Expatriate Compliance at Tax Consulting South Africa, said the rules are designed to ensure that non-residents’ tax status and compliance are verified before any remittances are processed.
"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," Ndlovu said.
Ndlovu added that the updates, reflected in the Authorised Dealer Manual, represent a major departure from previous practice. Under the new framework, non-residents or individuals who have ceased South African tax residency must obtain either an Approval International Transfer (AIT) Tax Compliance Status (TCS) PIN or a Manual Letter of Compliance (MLC) from SARS before any income can be transferred abroad.
"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."
According to the new rules, retirement and pension income are among the most affected. Only payments from registered retirement funds or licensed insurers may be transferred offshore, and the qualifying income must be recorded under specific SARS tax codes.
"Only pensions and/or annuities paid by registered retirement funds or licensed insurers may now be transferred offshore. Payments from unregistered entities are excluded."
Ndlovu also noted that rental income from South African property is subject to stricter rules. Transfers require a rental agreement, confirmation that the rent is reasonable, and SARS approval via an AIT TCS PIN or Manual Letter of Compliance.
"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."
mthobisi.nozulela@iol.co.za
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