Let’s talk about foreign exchange in South Africa. Foreign Exchange transactions can be a daunting and intimidating topic for most people, with most banks and financial intermediaries unfortunately adding more confusion with the overuse of financial jargon and lack of general transparency.
How Does Foreign Exchange Work?
In layman’s terms, when you are transferring money from South Africa abroad, you are essentially “selling” your domestic currency (South African Rand) and “purchasing” a foreign currency. The Foreign Exchange Transaction can also go in the opposite direction, where you “sell” your foreign currency (be that the British Pound, US Dollars, Euros etc.) and “buy” local currency (the South African Rand).
What Is A Discretionary Allowance?
More on forex in South Africa specifically. Every South African resident over the age of 18 has what is referred to as, “an annual discretionary” allowance of R1’000’000.00. A South African resident may transfer a maximum amount of one million Rand, without having to obtain a tax clearance certificate from SARS (South African Revenue Services).
Foreign Investable Allowance
South African residents wishing to transfer money internationally in excess of one million Rand (in excess of their discretionary allowance) can also make use of their “foreign investable allowance.” The foreign investable allowance amounts to R10’000’000.00 per annum. Application and receipt of
a tax clearance certificate will be needed from SARS, should an individual wish to make use of their foreign investable allowance. SARS tax clearance is not needed for South African residents wishing to make use of their annual discretionary allowance.
The above mentioned discretionary and foreign investment allowances relate to South African resident individuals only. SARS and the South African Reserve Bank (SARB) have different requirements for South African Businesses who wish to make use of international payment solutions or non-resident individuals (non-South African citizens, who are residing in South Africa for work or leisure).
Domisa’s Currency Conversion Process
The exact process of converting your South African Rands to a foreign currency through Domisa, is then as follows:
- Open an account with us (free of charge). Our South African Rand accounts are held with Mercantile Bank and earn a very lucrative interest on your cash deposits.
- Once your Rand account is opened, you will have to deposit funds into it and specify the amount of Rands that you would like to sell or the amount of foreign currency that you would like to purchase.
- Domisa then does the currency conversion for you and instructs the transfer to your offshore account. Domisa can assist you in opening an offshore bank account, should you not have one. Your converted currency will reflect in your foreign bank account within two business days.
Please contact us for a free consultation to discuss your business needs and what Domisa Treasury could do to assist you in managing your foreign currency risk in the most efficient and cost-effective manner.
Forex South Africa | Forex Payments | Forex Exchange