Medium Term Budget – Exchange Control Relaxations
On 8 November, the Financial Surveillance Department issued Circulars 38 to 41 which confirmed and clarified the proposed changes announced in the Medium Term Budget.
Effective 8 November 2010, the following will apply:
An increase in the annual investment allowance from the previous once off maximum of R4mil per individual to a R4 million annual allowance. As from today, a person may therefore apply to externalize a further R4million up to the 31st of December 2010. On 1 January 2011, that person may yet again apply to externalize another R4million and annually thereafter.
- Individuals may also, on application basis, invest in excess of the foreign investment allowance abroad. The category of investments includes, but is not limited to foreign fixed property. This dispensation effectively widens the previous dispensation where residents were allowed to invest in such a way in the SADC countries. A resident may therefore now apply to acquire e.g. fixed property anywhere in the world even where he has already availed of his maximum foreign investment allowance.
- The annual discretionary allowance of R750,000 is increased to R1million for adults and R200,000 for person under the age of 18.
- The 10% exit levy for on liquid funds and quoted securities for new emigrants and existing emigrants with blocked funds has been withdrawn. In addition authorized dealers may now release blocked funds for local expenditure without any restriction, and
- International headquarter companies (“IHC’s”) based in South Africa will be allowed to “raise and deploy capital offshore without Exchange Control approval” as from 1 January 2011. Further details and other types of foreign investments will however be released in due course.