Page 41 - Nexia SAB&T Property & Tax Guide 2022

EXCHANGE CONTROL

ACQUISITION OF FIXED PROPERTY BY NON-RESIDENTS
Non-residents may invest in the Republic (including the acquisition of fixed property), provided
that suitable documentary evidence is received in order to ensure that such transactions are
concluded at arms’ length, at fair market-related prices, and are financed in an approved
manner. The following provisions relate to financial assistance in South Africa:
◆ Emigrants: Local financial assistance made available to emigrants is subject to the
1:1 ratio.
◆ Non-residents: Authorised Dealers may grant or authorise local financial assistance
facilities to non-residents in respect of bona fide foreign direct investments into South
Africa (including the acquisition of commercial property), without restrictions. Where
the funds are required for the acquisition of residential property (or other financial
transactions) in South Africa the 1:1 ratio will apply.
◆ Affected persons (i.e.where non-residents directly or indirectly owns 75% or more
of an entity): There is no restriction on the amount that could be borrowed locally in
instances where an affected person wishes to borrow locally to finance a foreign direct
investment into South Africa (including the acquisition of commercial property), or
for domestic working capital requirements. Wholly non-resident owned subsidiaries
may borrow locally up to 100% of the total shareholders’ investment in respect of
the acquisition of residential property (and or other financial transactions) in South
Africa.The effect of local participation in non-resident controlled entities is to make the
abovementioned norms more liberal the greater the local participation, i.e. the ability to
borrow locally increases. This is based on a formula.

DISPOSAL OF FIXED PROPERTY BY NON-RESIDENTS
Proceeds from the sale of assets, including immovable property by non-residents in South
Africa may be remitted abroad, with submission of proof (records) that foreign funds were
brought into South Africa in order to purchase the property. A non-resident who brings
funds into South Africa in order to purchase property, and who obtains either permanent or
temporary residency in South Africa, may remit the proceeds of the sale of the property abroad
(with proof) asif he or she was a non-resident, within 5 years of becoming a permanent or
temporary resident, however, after 5 years has passed, will be treated as a South African
resident for these purposes. Where there is a lack of proof, a special application to the Reserve
Bank can be made. Proceeds on the sale of assets, including immovable property in South
Africa by Emigrants will be subject to the blocked account provisions, and withholding tax.
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