Lovemore Ndlovu | Head | SARB Engagement and Expatriate Compliance | Tax Consulting SA | mail me |
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.
Recent feedback from multiple South African banks indicates tighter access to non-resident bank accounts when account holders do not meet additional tax compliance requirements. As a result, foreign property owners could temporarily find themselves out of pocket under these new banking and tax rules.
Receiving and remittance of rental income
Bank messages now signal that bona fide non-resident bank accounts may soon face restrictions unless account holders meet additional tax compliance requirements. If clients fail to meet these new compliance requirements, banks will place funds received from rental sources into a non-interest-bearing suspense account before crediting them 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 requirement before individuals can receive or send money offshore. This requirement has become more prominent following regulatory changes introduced by the South African Reserve Bank (SARB), which took effect on 23 October 2025.
These developments form part of broader new banking and tax rules affecting foreign property owners.
What has changed in banks’ tax compliance requirements?
Many bona fide non-resident clients have recently received advice from their banks that rental income cannot be cleared or credited into their Non-Resident Rand Accounts unless they provide proof of tax compliance.
Banks now require confirmation in one of the following forms:
- AIT TCS PIN, where the individual is registered with the South African Revenue Service (SARS); or
- Manual Letter of Compliance – International Transfer, where the individual is not registered on the SARS system.
Engagements with both SARS and SARB have confirmed this requirement. Both institutions clarified that bona fide non-resident individuals who earn rental income from South Africa are now subject to AIT TCS PIN requirements. This applies even where authorities previously regarded the income as freely remittable.
South African tax laws also require property owners who receive rental income to register for tax and submit annual tax returns declaring that income. Consequently, this effectively removes the Manual Letter of Compliance – International Transfer from the list of acceptable tax compliance confirmation documents for bona fide non-resident individuals. As a result, the AIT TCS PIN now remains the primary requirement under these new banking and tax rules.
Applying for an AIT TCS PIN before rental income is received
A major area of confusion involves banks instructing bona fide non-resident clients to apply for an AIT TCS PIN in advance. In many cases, banks want clients to apply before their rental income reflects 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 instead of funds that are already available.
This approach creates several practical problems:
- Rental income is typically received monthly and often fluctuates.
- AIT TCS PIN applications require demonstrable availability of funds.
- SARS systems are designed around actual amounts rather than projections.
From both a practical and technical perspective, applicants generally cannot apply for an AIT TCS PIN before the funds reflect in the bank account. Although applicants could theoretically submit a lease agreement to SARS to indicate anticipated income, SARS has not issued clear guidance explaining how officials would assess or approve these applications.
Why are banks taking different approaches?
The discrepancy appears to stem from the way bona fide non-resident bank accounts operate under exchange control rules.
When banks credit local funds, such as rental income, into a non-resident account:
- The funds become immediately encumbered.
- Under previous rules, clients could use the funds locally or remit them offshore freely once banks lifted the encumbrance.
- Under current rules, rental income is now subject to AIT TCS PIN requirements.
If a bank releases the encumbrance without an AIT TCS PIN, the funds become freely remittable offshore. However, this is precisely what the new SARB framework now seeks to regulate through these new banking and tax rules.
This likely explains why some banks request an AIT TCS PIN upfront before releasing the encumbrance.
However, this process creates a catch-22:
- Without an AIT, the funds remain encumbered.
- While the funds remain encumbered, clients cannot use them locally or offshore.
- Yet an AIT TCS PIN application typically requires funds to already be available.
Each bank acts as an Authorised Dealer and therefore has discretion regarding how it implements these controls. Consequently, this explains the lack of uniformity across the banking industry.
What makes the most sense practically?
From both a policy and process perspective, it would make far more sense to address AIT requirements at the point of repatriation or offshore transfer rather than before receipt of funds into bona fide non-resident accounts.
However, this approach would mean rental income remains encumbered until SARS issues the AIT TCS PIN. In turn, this would limit the taxpayer’s ability to use the funds locally during the interim period. Therefore, this area clearly requires further alignment and clarification.
Industry stakeholders also expect this matter to arise during future ruling meetings between SARS, SARB, and the banking industry.
Key takeaways for foreign property owners
If you are a foreign national earning rental income from South Africa:
- Do not assume rental income is automatically freely remittable.
- Expect banks to request either an AIT TCS PIN or a Manual Letter of Compliance.
- If you are not registered with SARS for tax, this situation 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 to service financial obligations in South Africa.
In conclusion
Although the regulatory intent clearly aims to strengthen tax and exchange control oversight, the practical implementation remains uneven and confusing.
Until authorities issue clearer industry-wide guidance, foreign property owners should adopt a proactive compliance approach. This will help them avoid delays, restrictions, or unnecessary frustration under the evolving new banking and tax rules.
If you own rental property in South Africa and remain uncertain about your tax registration status or AIT TCS PIN requirements, now is the time to seek professional guidance before your funds are affected.
