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 above mentioned 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, with submission of proof (records) that foreign funds were brought into South Africa in order to purchase the property. A non-resident who brings funds into South Africa in order to purchase property, and who obtains either permanent or temporary residency in South Africa, may remit the proceeds of the sale of the property abroad (with proof) as if he or she was a non resident, within 5 years of becoming a permanent or temporary resident, however, after 5 years has passed, will be treated as a South African resident for these purposes. Where there is a lack of proof, a special application to the Reserve Bank can be made. 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.