SARS ON MANAGING PAYROLL TAXESJune 27, 2019
2019 TAX LEGISLATIVE AMENDMENTAugust 12, 2019
The South African Reserve Bank (“SARB”) is the central bank of the Republic of South Africa and the primary purpose is to achieve and maintain price stability in the interest of balanced and sustainable economic growth in South Africa. Part of the SARB’s functions is to maintain a database of all loan commitments by South African residents to non-residents.
In situations when loan commitments are made between South African residents and non-residents, approval needs to be obtained in advance from the SARB. When an application is made to the SARB, certain information and supporting documents will be requested by the SARB prior to approving the transaction and providing the applicant with a foreign loan reference number. The following information and supporting documents are generally sufficient –
- Copies of any agreements relating to the terms and conditions of the transaction. In these instances, it is important to ensure that any drawdown provisions, interest rates etc. are communicated to the SARB to update their records accordingly. Should there not be any documents, contact your advisor to assist with the drafting thereof.
- Confirmation of the source of funding and the relationship between the parties.
- Completed and signed application form which can be obtained from your bank.
The aforesaid documents can be accompanied by an executive summary of the transaction to provide the SARB and its representative with a clear background to the transaction and the salient terms thereof. As soon as the SARB have processed the documents and all is in order, you will receive a document with a foreign loan reference number.
It is generally accepted that SARB approval must be obtained prior to introducing foreign funds to South Africa. It is important to note that even in circumstances when cash does not flow immediately, a loan is created. This would also fall within the ambit of the loan policies of the SARB and therefore approval should be obtained for such transactions / undertakings.
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)