When disinvesting, prior to the remittance out of South Africa of the proceeds of the sale of immoveable property in South Africa or shares in a company owning South African immoveable property, South African Reserve Bank approval is required. This in turn requires that all taxes in respect of the aforementioned have been discharged. Generally, provided that the relevant purchase price was funded from outside of South Africa in the first instance, there is generally no further restrictions on the remittance of the aforementioned proceeds. Banking, Finance and Exchange Control While generally there are no substantial restrictions for foreign investors in setting up a bank account in South Africa, foreign exchange and remittances are subject to exchange control in South Africa, which apply directly to residents and consequently indirectly to foreign investors. Exchange controls were implemented to regulate the flow of capital into and out of South Africa. The framework pertaining to such is based on the premise of a total prohibition to dealing in foreign exchange (except with permission and on the conditions set out by National Treasury). As a result of the impact on the conduct of normal international trade and payments, the underlying economic policy is not totally prohibitive. More accurately, the current purpose of exchange control is to ensure the timeous repatriation into the South African banking system of foreign currency acquired by South African residents, and to prevent the loss of foreign currency resources through the transfer abroad of real or financial capital assets held in South Africa. The administration of exchange control in South Africa is conducted by South African Reserve Bank and administratively performed by its Financial Surveillance Department. Certain powers, set out in the Exchange Control Rulings, have been further delegated to so- called authorised dealers, which consists of banking institutions which have been licensed to deal in foreign exchange and/or perform other delegated functions on behalf of the South African Reserve Bank. Notably, exchange controls affect all cross-border transactions, which are subject to approval, and all foreign investors (and local parties to such transactions) are advised to consult with an adviser or authorised dealer prior to entering into any transaction, to ensure compliance with exchange controls.
Further, for the above purposes, a distinction for exchange control purposes is provided between residents and non-residents of the Common Monetary Area, which is constituted of Lesotho, Namibia, South Africa and Swaziland. Tax Non-residents are taxed on income where the source is, or is deemed to be, within South Africa. This applies whether the taxpayer is an individual, a juristic person or another taxable entity. If a company is not a resident but receives income from a source within South Africa, the company is liable to pay tax on this income. Corporate Tax The corporate tax rate in South Africa is set at 28%, which is comparable to other African countries and developing nations. Any company that carries on a business or acquires an office in South Africa must be represented by appointed within one month after the company begins to carry on business or acquires an office. The public officer is the company’s representative taxpayer. Personal Income Tax Income tax is the normal tax which is paid on taxable income. Examples of amounts an individual may receive, and from which the taxable income is determined, include: • Remuneration, such as, salaries, wages, bonuses, overtime pay, taxable (fringe) benefits, allowances and certain lump sum benefits; • Profits or losses from a business or trade; • Income or profits arising from an individual being a beneficiary of a trust; • Director’s fees; • Investment income, such as interest and foreign dividends; • Rental income or losses; and • Income from royalties. an individual who resides in South Africa. The representative is the public officer and must be
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