New Banking and Tax Rules Impact Receiving and Remittance of Rental Income for Foreign Property Owners in South Africa

Bank messages signal that bona fide non-resident bank accounts may soon be restricted unless additional tax compliance requirements are met. 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. This requirement has become more prominent following regulatory changes introduced by the South African Reserve Bank (SARB), effective 23 October 2025.

What Has Changed in Banks’ Tax Compliance Requirements?

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.

Banks are now requiring 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.

This requirement has been confirmed following engagements with both SARS and SARB, who 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.

It must be noted that by South African tax laws, 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 a requirement.

The Practical Snag: Applying for an AIT TCS PIN Before Rental Income Is Received

A key area of confusion is that some banks are 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.

This approach is problematic for several reasons:

• 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, 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. 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.

Why Are Banks Taking Different Approaches?

The discrepancy 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 into a non-resident account:

• The funds are immediately encumbered
• Under previous rules, once encumbrance was lifted, funds could be used locally or remitted offshore freely
• 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, which is precisely what the new SARB framework seeks to regulate.

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
• While encumbered, the client cannot use the funds 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.

What Makes the Most Sense Practically?

From a policy and process perspective, it would be far more workable for AITs to be addressed at the point of repatriation or transfer offshore, rather than before receipt of funds 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. 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.

Key Take-Aways for Foreign Property Owners

If you are a foreign national earning rental income from South Africa:

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

Summary

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.

If you own rental property in South Africa and are uncertain about your tax registration status or AIT TCS PIN requirements, now is the time to seek professional guidance, before your funds are affected.