SARS is coming after foreign property investors

New Reserve Bank and banking rules now require foreign property owners earning rental income in South Africa to meet stricter tax compliance, with non-compliance risking delays or frozen non-resident accounts.

This was explained by Tax Consulting SA’s Head of SARB Engagement and Expatriate Compliance, Lovemore Ndlovu.

He warned that foreign nationals who own fixed property in South Africa and derive rental income from it are increasingly facing new compliance hurdles when accessing or transferring those funds.

Multiple South African banks have provided feedback indicating tighter access to non-resident bank accounts where additional tax compliance requirements are not met. This could leave foreign property owners temporarily out of pocket.

“Bank messages signal that bona fide non-resident bank accounts may soon be restricted unless additional tax compliance requirements are met,” Ndlovu said.

“If these new compliance requirements are not met, funds received from the rental source will be placed in a non-interest-bearing suspense account before being credited into the bona fide non-resident bank account.”

At the centre of this issue is the Approval International Transfer (AIT) Tax Compliance Status (TCS) PIN before receiving and sending money offshore, Ndlovu explained.

“This requirement has become more prominent following regulatory changes introduced by the SARB, effective 23 October 2025,” he said.

“Many bona fide non-resident clients have recently been advised by their banks that rental income cannot be cleared or credited into their Non-Resident Rand Accounts unless proof of tax compliance is provided.”

Ndlovu explained that South African banks are now requiring confirmation. This can come in one of the following forms –

• AIT TCS PIN, where the individual is registered with the South African Revenue Service (SARS)
• Manual Letter of Compliance – International Transfer, where the individual is not registered on the SARS system

“This requirement has been confirmed following engagements with both SARS and SARB,” Ndlovu noted.

They have clarified that bona fide non-resident individuals earning rental income from South Africa are now subject to AIT TCS PIN requirements, even where the income was previously regarded as freely remittable.

Importantly, under South African tax law, where one owns a property and receives rental income, they are obligated to register for tax and submit a tax return annually to report the rental income earned.

This effectively removes the “Manual Letter of Compliance – International Transfer” from the list of tax compliance confirmation documents for bona fide non-resident individuals, leaving only the AIT TCS PIN as the required document.

Catch-22 for property investors

Ndlovu identified that the key area of confusion is some banks instructing bona fide non-resident clients to apply for an AIT TCS PIN in advance, before the rental income is even received and reflected in their bank accounts.

“In effect, this interpretation suggests that non-residents must apply for an AIT TCS PIN based on anticipated or future rental income, rather than on funds that are already available,” he said.

Ndlovu said this approach is problematic for several reasons. Firstly, rental income is typically received monthly and often fluctuates.

Other problems include the fact that AIT TCS PIN applications also require demonstrable funds availability, and SARS systems are designed around actual amounts, not projections.

“From a practical and technical perspective, it is generally not feasible to apply for an AIT TCS PIN before funds are reflected in the bank account,” he said.

“While one could theoretically submit a lease agreement to SARS to indicate anticipated income, there is no clear guidance on how SARS would assess or approve such applications.”

According to Ndlovu, the discrepancy between banks, which are using different approaches, appears to stem from how bona fide non-resident bank accounts operate under exchange control rules.

When local funds, such as rental income, are credited to a non-resident account, they are immediately encumbered.

Under previous rules, once an encumbrance was lifted, funds could be used locally or remitted offshore freely. However, under current rules, rental income is subject to AIT TCS PIN requirements.

“If a bank releases the encumbrance without an AIT TCS PIN, the funds become freely remittable offshore, which is precisely what the new SARB framework seeks to regulate,” Ndlovu said.

“This likely explains why some banks are requesting an AIT TCS PIN upfront, before releasing the encumbrance. However, this creates a catch-22.”

Without an AIT, the funds remain encumbered, and while encumbered, the client cannot use them locally or offshore. Yet an AIT TCS PIN typically requires that funds already be available.

“Each bank, as an Authorised Dealer, has discretion in how it implements these controls, which explains the lack of uniformity across the industry,” he said.

Practical solutions

From a policy and process perspective, Ndlovu said it would be far more workable for AITs to be addressed at the point of repatriation or transfer offshore, rather than before funds are received into bona fide non-resident accounts.

“However, this would mean that rental income remains encumbered until the AIT TCS PIN is issued, limiting the taxpayer’s ability to use the funds even locally in the interim,” he said.

“This is an area that clearly requires further alignment and clarification, and is expected to be raised in future rulings meetings between SARS, SARB, and the banking industry.”

Ndlovu explained that there are several key things foreign nationals earning rental income from South Africa should keep in mind –

• Do not assume rental income is automatically freely remittable
• Expect banks to request either an AIT TCS PIN or a Manual Letter of Compliance
• Not being registered with SARS for tax is becoming increasingly risky
• Non-compliance may result in restricted or frozen Non-Resident Rand Accounts
• Advance planning is essential, particularly if you rely on rental income offshore or for servicing your financial obligations in South Africa

Ndlovu stressed that while the regulatory intent is clearly to strengthen tax and exchange control oversight, the practical implementation remains uneven and confusing.

“Until clearer, industry-wide guidance is issued, foreign property owners should take a proactive compliance approach to avoid delays, restrictions, or unnecessary frustration.”