SARB and SARS Compliance for South African EB-5 Investors

SARB Exchange Control: Transferring $800,000 from South Africa

The South African Reserve Bank regulates the transfer of capital out of South Africa. South African residents have an annual foreign capital allowance of R10 million (approximately $435,000 at current rates), which is insufficient to cover the full $800,000 EB-5 investment in a single year.

To transfer the full investment amount, South African investors typically use a combination of: the annual R10 million foreign capital allowance (available to all South African residents over 18); a SARB-approved foreign investment application for amounts exceeding the annual allowance; and in some cases, funds already held offshore that were previously transferred under prior allowances.

All transfers must be made through an authorised dealer (a South African bank) and must be accompanied by the required SARB documentation. Attempting to transfer funds without SARB approval is a criminal offence under the Currency and Exchanges Act, 9 of 1933.

SARS Tax Residency Exit Planning

When a South African tax resident emigrates, SARS treats this as a "deemed disposal" of all worldwide assets at market value on the date of tax residency exit. This triggers capital gains tax on the deemed gain, even though no actual sale has occurred. For high-net-worth investors with significant assets, this can be a substantial tax liability.

Careful SARS tax exit planning is essential before beginning the EB-5 process. Key considerations include: the optimal timing of tax residency exit; the valuation of all worldwide assets; the capital gains tax liability on deemed disposal; the interaction with the annual exclusion and primary residence exclusion; and the ongoing SARS obligations for South Africans who become US tax residents.

South African Citizenship Retention

South African law provides for automatic loss of citizenship upon voluntary acquisition of another citizenship (Section 6(1) of the South African Citizenship Act, 88 of 1995). Before naturalising as a US citizen, South African EB-5 investors must file a retention of citizenship application with the Department of Home Affairs.

This application must be filed before the date of naturalisation. Failure to do so results in automatic loss of South African citizenship, which cannot be reversed. Your South African attorney should manage this process as part of your overall emigration planning.

Frequently Asked Questions