South Africans who choose to live or work abroad are entangled in complex bureaucratic processes, and one major problem is that their bank accounts are being frozen.
These complex problems are being created by the National Treasury, the South African Revenue Service (SARS) and the South African Reserve Bank (SARB).
While frozen bank accounts are only one of the many consequences, it’s becoming a common problem, with many South Africans unable to access funds to live or pay salaries.
This is the feedback from immigration tax specialist William Louw from Sable International, who told BizNews that the core problem is a breakdown in coordination between the three institutions.
Instead of sticking to their mandates, he believes the authorities are trying to overlap into each other’s jurisdiction and causing confusion.
In his view, each institution should “stay in its lane” and focus on making it easier for taxpayers to manage their affairs, whether from an exchange control or tax perspective.
For South Africans emigrating—either permanently or temporarily—the process begins with tax emigration.
“The first thing you need to look at is, you need to tax immigrate out of South Africa,” Louw explained. This involves informing SARS of the departure date, declaring worldwide assets, paying any applicable exit tax, and obtaining a letter confirming non-residency.
Once that is done, SARS recognises that it has limited taxing rights—generally confined to South African-sourced income.
However, Louw said SARS itself often struggles to distinguish properly between different bases for ceasing tax residency, such as ordinarily residence, physical presence, or relief under a double taxation agreement (DTA).
“They seem to think that all of them are one-off effects, which is not the case,” he said, stressing that each has distinct legal implications. The situation becomes even more complicated when exchange control rules are layered on top.
South Africa’s tax and regulation authorities need to coordinate and implement simpler rules
According to Louw, the Reserve Bank has effectively imported tax concepts into exchange control, creating unintended consequences.
“If you’ve tax emigrated out of South Africa, even if you’re a South African ID holder, they will see you as a non-resident for exchange control,” he explained.
That classification forces individuals to convert their local bank accounts into non-resident accounts, often resulting in restrictions on allowances and transactions. In some cases, bank accounts are frozen outright.
“There is a growing number of situations where the bank has now classified people as non-residents, frozen their bank accounts, and cannot access their money,” Louw said.
He noted that the only way to resolve this is often to obtain formal confirmation from SARS, which his a process that can take six months after they’ve left the country.
In the interim, affected individuals may have to return to South Africa in person to persuade their bank to unlock the account.
“We’re having a lot of cases like that,” he added, including business owners living abroad whose South African accounts have been frozen, leaving them unable to pay staff.
Louw argued that the tightening of exchange controls is backfiring. “If it were my decision, I’d probably just rip everything out of South Africa because I don’t want to deal with all the red tape,” he said.
Rather than preventing capital flight, the current system is accelerating it by frustrating South Africans who had intended to keep assets, businesses and investments in the country while working abroad.
He warned that the broader economic consequences could be severe. Many South Africans working overseas intend to return and, in the meantime, continue building assets at home.
However, if maintaining bank accounts and moving legitimate income becomes too difficult, the investment may simply remain offshore.
“You need to create the right environment for people to want to invest in. Why would you want to invest where you’re not comfortable?” he questioned.
He urged all relevant institutions to address the issues and to consider better coordination and simpler rules.
If SARS, the Reserve Bank and tax practitioners worked together to streamline processes, he believes compliance would improve, tax collection would be easier, and confidence in South Africa as an investment destination would strengthen.
