Page 37 - Robin Twaddle PTG 2017 Digital

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. 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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