Sars crackdown targets expats moving money offshore

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JEREMY MAGGS: Now, as I understand it, for years many South Africans living abroad moved money out of the country with relatively little friction.

But all of that has changed, under the new exchange control framework, banks now require something called an Approval of International Transfer (AIT) certificate before funds can be moved.

The warning is that without it, transfers can be stopped and accounts effectively frozen.

So I think the real issue is whether South Africans abroad understand just how exposed they may be if their tax residency status is still misaligned and what Sars (South African Revenue Service) has on its system. Well, let’s discuss that in a little more detail.

I’m in conversation now with Jonty Leon, managing partner at tax and advisory firm the Leap Group. Jonty, welcome, is this really a compliance cleanup or has moving money out of South Africa just become a lot harder by design?

JONTY LEON: Hi Jeremy, thanks for having me. I think it is both a compliance cleanup, as well as a bit of an enforcement mechanism that Sars is now using to try and ensure that all taxpayers are compliant and that they’re extracting every last bit of taxpayer money that they can.

JEREMY MAGGS: What has actually changed then, Jonty, in practical terms, for an expat trying to transfer money today than there was, say, a year, 18 months ago?

JONTY LEON: Under the old system, all you needed was a good standing tax clearance certificate and you were able to move funds abroad.

Under the new system, the AIT, it’s not just a form that needs to be filled out, but it’s an entire application process where Sars is able to dig into all of your affairs before they will allow you to move money out of the country.

JEREMY MAGGS: Is the biggest danger here, Jonty, not the AIT itself, but maybe the fact that expats would wrongly assume that Sars already sees them as non-resident.

Read:
Foreign properties now in Sars’s sights [Dec 2025]
Faster audits, but a tougher Sars [Nov 2025]
Foreign pensions now under attack from Sars [Mar 2025]

JONTY LEON: I think that you’ve hit the nail on the head there. The majority of South Africans who we deal with are outside of South Africa and may have been outside of South Africa for many, many years.

But with the AIT application, you have to declare to Sars if you are a resident or non-resident, and this makes a massive difference.

If you’re a tax resident of South Africa, Sars is able to look into your local income and assets, as well as your foreign income and assets. If you’re a non-resident, they can only look at your South African local income and assets.

The problem is, if you are not noted correctly as a non-resident and you go and apply for an AIT, well, all of a sudden, you’ve opened yourself up to Sars looking at your entire estate across the world.

JEREMY MAGGS: I guess we’ve also got to ask, how many South Africans then, this is probably difficult to answer, who’ve been living abroad have maybe been living on a false sense of security. In other words, assuming they’re compliant when in fact they are anything but.

JONTY LEON: Yeah, it is a difficult question to answer, but this is the business that we’re in. Every single one of our clients is someone who is finally realising that they aren’t actually compliant.

Listen/read: Sars already knows more about offshore income than expats think

They think they’re compliant, they look at their tax profile, and everything looks hunky-dory to them, but they don’t realise the pitfalls of tax residency.

That’s where we have to come in and be proactive about it.

JEREMY MAGGS: If your tax residency status is wrong, I imagine, within the Sars system itself, you would effectively be inviting scrutiny of your entire global financial life. It could get tough.

JONTY LEON: Exactly that. That then gets quite scary for taxpayers abroad, because they may have been there for many years, and now they’ve got the worry that Sars wants to tax them on everything they’ve been building outside of South Africa as though they were tax residents.

JEREMY MAGGS: Jonty, consequence is that accounts can effectively be frozen, as I’ve outlined. How does that happen and how quickly could it happen?

JONTY LEON: It’s happening quite often now. Basically, if you try to move money outside of South Africa but you don’t have the requisite approval from Sars, banks are now required in terms of the new exchange control regulations to freeze your account until such time as you are fully compliant with Sars and have the requisite approval.

JEREMY MAGGS: So let me choose my next words carefully. Are banks, then, acting maybe as enforcers for Sars and exchange control in a more assertive or aggressive way than they were before?

JONTY LEON: I tend to agree with you on that statement, but only based on what regulation has now forced them to do so.

JEREMY MAGGS: What kind of recourse do you have if you find yourself on the other side of the law?

JONTY LEON: Well, that’s where we need to look at your Sars profile and say, how do we fix this?

We need to look back to when you left South Africa and approach Sars before you’re on the back foot and they’ve approached you, to go and retrospectively fix all of that non-compliance and bring you up to date so that you don’t fall into any traps going forward.

Read:
South African expats: How will Sars find you? [2024]
Budget shows SA expats remain top priority for Sars [2022]
Tax man getting stricter with people working abroad [2022]

JEREMY MAGGS: So what then is the first thing do you think an expat should check today after listening to our conversation, if they try to move a single rand?

JONTY LEON: I think number one, are all your tax returns up to date and do you have any penalties lying there with Sars or anything owing to Sars, and what their tax residency status is, because that at the end of the day determines what will need to be declared to Sars in terms of the AIT.

JEREMY MAGGS: Jonty Leon, thank you very much indeed for the explanation, managing partner at the tax and advisory firm the Leap Group.