Distribution of funds to non-resident trusts by resident trusts

It has been the practice of SARS not to approve the release of funds when resident trusts make distributions to non-resident trusts. Whilst technically only the South African Reserve Bank (“SARB”) has authority over the release of funds abroad, under certain circumstances SARB requires a tax compliance status (“TCS”) PIN before they release the funds. SARS, however, does not issue a TCS PIN for a trust. SARS is still in talks with SARB regarding the issuing of a TCS PIN for trusts.

Following numerous queries in this regard, SARS has re-iterated its stance on the matter and herewith confirms that it will not approve the release of funds vested and distributed to non-resident trusts.

SARS is currently investigating other options related to the distribution of funds/amounts to non-residents and is in discussions in this regard. SARS takes note of the fact that SARB has relaxed certain exchange control requirements but has decided, based on the risks involved, not to approve the release of funds to non-resident trusts.

This does, however, not preclude a resident trust from vesting amounts in non-resident individuals and to apply for the relevant approvals, as per the current approved practice.

22/04/2022