A client wishes to make foreign investment on the following basis: Invest R500k at a time, bring it back into SA and then re-invest it again . It is anticipated that approximately R4m will eventually travel back and forth this way. The question now arise
Important:
This answer is based on tax law for the year ending 28 February 2020.
Answer:
The requirement to obtain confirmation of tax compliance is not really the issue here. This request is not a tax related one and must be addressed to the taxpayer’s authorised dealer.
In terms of paragraph 3.6.1, the “foreign capital allowance may be availed of through an Authorised Dealer, which may be transferred to a foreign currency account with a local Authorised Dealer or invested abroad, within a limit of R10 million per calendar year per individual who is in possession of a Tax Clearance Certificate and green bar-coded South African identity document or Smart identity document card and is 18 years and older. The funds to be transferred must be converted to foreign currency by an Authorised Dealer.”
This implies that application must be made to SARS first and thereafter the authorised dealer is approached.
With regard to ‘bringing it back’ we also suggest that you obtain guidance from an authorised dealer. You don’t seem to require guidance on the tax issues here. Under paragraph 3.6.2 “Individuals may not utilise funds in terms of the aforementioned dispensation or any other authorised foreign assets to enter into a transaction or a series of transactions to directly or indirectly acquire shares or some other interests in a CMA asset (i.e. through a ‘loop structure’). Similarly, such funds may not be re-introduced as a loan to a CMA resident.”