Interim relief granted on tax compliance requirements for dividend, interest and fee payments to non-residents

In late October 2025, the South African Reserve Bank's Financial Surveillance Department issued Exchange Control Circular No. 15/2025 (Circular 15), introducing amendments to section B.3 of the Currency and Exchanges Manual for Authorised Dealers. The changes imposed new tax compliance requirements on income remittances to non-residents, including dividends, directors' fees, rental payments, and trust distributions. The response from market participants was immediate and concerned.

Under Circular 15, Authorised Dealers (AD) could no longer allow the transfer of dividends distributed by a South African company unless the non-resident recipient first obtained SARS clearance. Where the recipient was not registered with SARS as a taxpayer, a Manual Letter of Compliance for International Transfer (MLC) was required. Where the recipient was already registered with SARS, a Tax Compliance Status Approval for International Transfer PIN (AIT) was mandatory. These requirements applied regardless whether the shares had been endorsed as non-resident, were listed or unlisted shares and irrespective whether any withholding taxes had been settled at source.

The practical implications were substantial. Foreign shareholders who had no prior registration with SARS faced the prospect of navigating the MLC process merely to receive dividends to which they were entitled, even in the case of listed shareholding. Non-resident directors receiving fees from South African companies faced identical hurdles. Landlords with residents abroad found themselves unable to receive rental income without first satisfying SARS that they had no outstanding South African tax obligations. Circular 15 represented a material tightening of exchange control requirements, reversing the trajectory of gradual liberalisation observed over recent years.

The December 2025 Interim Guideline

On 11 December 2025, the Financial Surveillance Department issued an interim guideline note to AD (Interim Guideline). The Interim Guideline expressly refers to Circular 15 and acknowledges that "further consultations with market participants, the South African Revenue Service and the Financial Surveillance Department" have taken place since October 2025. The outcome of those consultations is a significant relaxation of the compliance burden, at least on an interim basis.

The guideline note introduces a distinction that was absent from the Circular 15 amendments: the treatment of non-resident entities differs materially from the treatment of non-resident private individuals.

Non-resident entities: a complete carve-out

For non-resident entities, the relief is comprehensive. AD may now allow the transfer of income due to non-resident entities without any requirement to obtain a MLC or AIT. This is a complete reversal of the Circular 15 position for corporate and other entity recipients.

The practical consequence is that foreign holding companies, investment funds, pension schemes, and other non-resident entities receiving dividends, interest, or other income from South African sources are no longer required to satisfy SARS tax compliance requirements before those funds may be remitted. The AD's existing obligation to verify non-resident status remains, but the additional SARS MLC and AIT processes have been removed.

Non-resident private individuals: a nuanced position

For non-resident private individuals—whether genuinely non-resident or former South African tax residents who have formally ceased tax residency—the position is more nuanced. The Interim Guideline introduces different requirements depending on the nature of the income and the character of the paying entity.

Dividends
Dividends from listed South African companies may be transferred to non-resident private individuals without SARS clearance, provided the AD is satisfied that the individual is not a tax resident in South Africa. Dividends from unlisted companies, however, require a valid TCS of good standing furnished by the South African company making the distribution, not the non-resident recipient individual recipient / shareholder.

Interest
Interest payable by regulated entities, such as banks and other financial institutions, may be transferred to non-resident private individuals without any TCS requirement. Interest from unregulated entities requires a TCS of good standing from the paying entity.

Directors' and members' fees
Directors' fees and members' fees retain the more onerous requirements. The non-resident recipient must provide either the MLC or AIT. This represents a continuation of the Circular 15 position for these categories of income.

Rentals
Rental payments to non-resident private individuals also require the AIT from the recipients. This is consistent with the long-standing position that non-residents receiving South African rental income are taxable in South Africa on that income, subject to any relief under an applicable double tax agreement.

South African trust distributions
Income from South African trusts may be transferred to non-resident private individual beneficiaries provided the AD receives a TCS of good standing in the name of the trust. Where the distribution relates to rental income or directors'/members' fees, the recipient beneficiary must also provide their own AIT clearance. (Please note that the distributions by South African trusts to non-resident trusts still require the MLC. This requirement is unchanged by Circular 15 and the Interim Guideline.)

Additional information on applying for MLC and AIT can be found here: https://www.sars.gov.za/individuals/manage-your-tax-compliance-status/

Summary of SARS requirements for payments to non-residents

Practical Implications

The Interim Guideline provides welcome clarity and, for many non-residents, material relief. The position may be summarised as follows.

First, non-resident recipient entities are entirely exempt from the SARS compliance requirements introduced in Circular 15. This removes a significant administrative burden for non-resident corporate and institutional investors that receive income payments from South Africa.

Second, non-resident recipient private individuals receiving dividends from listed companies or interest from regulated financial institutions face no additional SARS requirements beyond the AD satisfying itself of their non-resident status.

Third, non-resident recipient private individuals receiving dividends from unlisted companies or interest from unregulated entities must ensure that the paying South African entity maintains a TCS of good standing. The compliance burden shifts to the local entity rather than the foreign recipient individual.

Fourth, directors' fees, members' fees, and rental income retain the full AIT requirements. Non-resident individuals earning income in these categories must navigate the SARS clearance process before funds may be remitted.

Fifth, the note expressly states that other documentary requirements outlined in the AD Manual remain extant. The relaxation relates specifically to SARS tax compliance requirements, not to exchange control document requirements more broadly.

An interim arrangement

The Interim Guideline is expressly described as an interim measure. Formal amendments to the AD Manual will be communicated "in due course." This suggests that the final position may differ from the current interim arrangements, and practitioners should monitor developments closely.

Nonetheless, the interim relief is significant. Circular 15 notice created genuine uncertainty and practical difficulties for non-residents and the South African entities making payments. The Interim Guideline demonstrates that market representations have been heard and that both Financial Surveillance Department and SARS are prepared to recalibrate their approach where the compliance burden proves disproportionate to the regulatory objective.