How to Invest Offshore as a South African

By Dave Nyam •  Updated: 05/29/24 •  6 min read

This offshore investment strategy has helped South African investors achieve benefits such as diversification, the potential to make a higher return, and hedging against local economic uncertainties. This essentially means South Africans spread their investments in foreign markets across a variety of economies and a series of sectors, thereby reducing the associated risk of losing investments in case of the poor performance of these economies and sectors. This article attempts to give the South African reader the lowdown on offshore investing: what’s in it for him or her, what’s the degree of risk versus reward, and what amount of money can leave the country.

How to Invest Offshore

There are two options. They can use their Single Discretionary Allowance of up to R1m a year to send their money offshore without the need for a tax clearance certificate. This facility is granted by the South African Reserve Bank and would allow one to invest in markets abroad without the hassle of a tax clearance certificate. This can make the process of investing offshore much quicker and easier. For amounts above R1 million, there is an FIA that covers up to R10 million per calendar year, though it does require a tax clearance certificate. This allowance is also one supplied by the South African Reserve Bank. However, since the amount is bigger in this instance, a tax clearance certificate is required.

Is it Good to Invest Offshore?

Yes, because it comes with several benefits. These include tax incentives, protection of assets, privacy, and the opportunity to venture in countries where investment is a great possibility. It also protects against political instability and economic misfortunes in the home country. The disadvantages, however, are the enormous costs and increasing regulatory attention that come with offshore jurisdictions and accounts.

Why Should South Africans Invest Offshore?

Of course, there are many reasons for this :

What are the Risks of Offshore Investments?

They include:

How Much Money Can I Take Offshore?

South Africans are allowed up to R1 million offshore annually without a tax clearance certificate. The process is termed the Single Discretionary Allowance (SDA). The South African Reserve Bank provides SDA, which gives South Africans a chance to invest in foreign markets without a hustle for a tax clearance certificate. This can make the offshore investment process quicker and easier. Besides, all South African residents have an annual Foreign Investment Allowance (FIA) of R10 million that can be taken outside the country. However, a tax clearance certificate is required to externalize funds through your FIA. 

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