National Treasury has announced the significant relaxation of exchange controls in the national budget announcement.
The annual allowance for individuals will more than double from R4 million to R10 million. The allowance for families rises to R20 million. The subcategories under the individual single discretionary allowance are also removed and the annual R1 million allowances may be used for any legal purpose abroad.
In response Magnus Heystek of Brenthurst Wealth welcomed the relaxation. “We are currently in a situation where the exchange rate of the rand is falling and investors want to diversify their asset base. This is a brave step.”
He added that this relaxation ensures that in practice exchange controls do not affect 99% of the population. “It is as if there are no exchange controls for virtually all investors. It is really only the super rich that will remain affected.”
National Treasury stated in its Budget Review that the amendments are aimed at allowing local firms to expand internationally, especially into Africa. The exchange control manual is also being simplified and this process will be completed later this year.
Other concessions include that authorised dealers may process corporate investment up to R1 billion per year. This is double the previous ceiling of R500 million. Previous unused allowances can also be carried forward.
The dispensation for credit card usage, currently limited to individuals, will be extended to corporates.
The Budget Review states that the Reserve Bank will communicate more details in due course.