For South Africans building lives abroad, the hardest part of leaving is often not the departureit’s the bureaucracy left behind. And increasingly, that bureaucracy is reaching into their bank accounts and turning the locks.
A growing number of emigrants are discovering that their South African bank accounts have been frozen, classified as non-resident, or placed under restrictions that leave them unable to pay salaries, service investments, or access their own money. The problem, according to immigration tax specialist William Louw of Sable International, stems not from malice but from institutional overlapthree powerful bodies stepping on each other’s toes.
Three Institutions, One Tangle
The National Treasury, the South African Revenue Service (SARS), and the South African Reserve Bank (SARB) each have distinct mandates. In theory, SARS handles tax; the Reserve Bank manages exchange control; Treasury sets policy. In practice, Louw argues, these lines have blurred into dysfunction.
“Instead of staying in their lane, they’re trying to overlap into each other’s jurisdiction,” he told BizNews. The result is confusion, delay, and for a rising number of taxpayers, frozen accounts.
The Tax Emigration Trap
The process begins innocuously enough. A South African moving abroadwhether permanently or temporarilymust formally emigrate for tax purposes. This involves notifying SARS of the departure date, declaring worldwide assets, paying exit tax where applicable, and obtaining a letter confirming non-resident tax status.
Once that letter is issued, SARS’s taxing rights are generally limited to South African-sourced income. The theory is clean. The practice is not.
Louw notes that SARS itself often struggles to distinguish between the different legal bases for ceasing tax residencywhether ordinary residence, physical presence, or relief under a double taxation agreement (DTA). “They seem to think all of them are one-off effects, which is not the case,” he says. Each carries distinct implications, and conflating them creates downstream errors.
The Exchange Control Overlay
The real complication arrives when exchange control rules are applied on top of tax status. The Reserve Bank has effectively imported tax concepts into its regulatory framework, 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,” Louw explains.
That classification triggers a cascade of restrictions. Local bank accounts must be converted to non-resident status. Allowances are capped. Transactions are scrutinised. In many cases, accounts are frozen outrightnot because of suspicious activity, but because the system cannot reconcile a South African identity document with a non-resident classification.
Six-Month Waits and Impossible Choices
The only remedy, Louw says, is formal confirmation from SARSa process that can take up to six months after the taxpayer has already left the country. In the interim, affected individuals are left in limbo. Some are forced to return to South Africa in person to plead their case at a bank branch.
“We’re having a lot of cases like that,” Louw says. Business owners living abroad have found their South African corporate accounts frozen, unable to pay staff salaries. Individuals cannot access savings. Legitimate funds become inaccessible not because of any infraction, but because the rules governing them have become ungovernable.
The Perverse Consequence
The irony, Louw points out, is that these controls are ostensibly designed to prevent capital flight. In practice, they are accelerating it.
“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 admits.
Many South Africans working abroad intend to return. They continue to hold properties, maintain investments, and build assets at home. But when maintaining those connections becomes a bureaucratic ordeal, the rational choice is to sever them.
“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?” Louw asks.
A Modest Proposal
His prescription is not radical. It is, in fact, remarkably simple: each institution should perform its core function and stop attempting to duplicate the others. SARS should tax. The Reserve Bank should regulate cross-border flows. Treasury should set policy. They should coordinate, certainlybut not conflate.
If SARS, the Reserve Bank, and tax practitioners worked together to streamline the emigration process, Louw believes compliance would improve, tax collection would become more efficient, and confidence in South Africa as an investment destination would strengthen.
Instead, the current trajectory points toward further entanglement, further frustration, and further flight. The accounts are frozen. The funds are trapped. And every day the bureaucracy remains unresolved, another South African abroad decides that the cost of staying connected has simply
