Update on the distribution of funds to non-resident Trusts by resident Trusts

Aug 1, 2023 | Uncategorised

1 August 2023 – It has been the practice of SARS not to approve the release of funds when resident Trusts make distributions to non-resident Trusts. Following queries in this regard, SARS herewith clarifies its stance on the matter and confirms that it will consider approval for the release of funds/amounts distributed to non-resident Trusts. The process required to obtain the necessary approval is to apply for a manual letter of compliance at SARS by emailing MLCA@sars.gov.za.

SARS has taken note of the fact that the SARB has relaxed certain exchange control requirements but has decided, based on the risks involved, to introduce the above-mentioned requirement to mitigate the risks.

SARS will perform verification processes to ensure that strict interpretation of the relevant sections of the Act are complied with. Note that the non-resident Trust must be a beneficiary of the resident Trust, and the distribution will only be considered by SARS if it complies with the terms and conditions in the Trust instrument of the resident Trust.

SARS will only allow such distributions if the resident Trust demonstrates that all tax liabilities in respect of the distribution were or will be settled.

Also see the Supporting Documents for Approval of International Transfers (AIT) webpage.

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