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Introduction

South Africa is one of the few countries that still applies fairly strict exchange control regulations to the movement of foreign currency in and out of the country. To this end, exporters are expected to make a declaration to the SA Reserve Bank (not directly, but through the normal commercial banking system) when they enter into an agreement with a foreign buyer. Essentially, they declare that they will pay across to their local bank any foreign exchange that they receive as a result of the export within a given period of time. The declaration needs to be completed before the export can take place as this document is one of the key documents that will need to be presented to the Customs authorities at the time that the goods are exported (at the border crossing at the airport or at the harbour).The forms used to make this declaration are discussed below.

Forms F178/NEP

In accordance with these exchange control regulations, the exporter is expected to complete Form F178 (where foreign exchange will be generated through the sale of the exported goods) or Form NEP (in instances where no foreign exchange is generated - NEP stands for No Exchange Proceeds). These two documents are both referred to as exchange control declarations. These forms are to be completed in duplicate and the original must be attested by the exporter's commercial bank; if this is not done, the form will not be accepted by the Customs authority. The bank will keep a copy, while the original and all additional copies, accompanied by the Customs Declaration Form (SAD 500), must be submitted to the Customs authority at the time of export. Customs will keep the original, returning additional copies to the exporter.

The Cross Border Foreign Exchange Transaction Reporting System

The SA Reserve Bank recently introduced the Cross Border Foreign Exchange Transaction (CBFET) reporting system. This is essentially an electronic reporting system developed by each Authorised Dealer (such as a bank authorised to deal in foreign exchange), in order to report on cross border transactions to the South African Reserve Bank. The Reserve Bank provided some guidance in the development of the CBFET reporting systems.

The CBFET is indirectly associated with the SAD500 Customs document. Information captured on the SAD500 is reported to the SARB by Customs. Once payment is received for the goods exported, your bankers will advise you of the funds received and request you to complete the appropriate Balance of Payment (BOP) form with the required information, i.e. details of the payment. This information is reported by your bankers to SARB via the CBFET system. Thus, you as an exporter have very little to do with the CBFET; instead, you work with the BOP form which is where you record the details pertaining to the receipt of foreign exchange for the export goods or services you have supplied to a foreign importer.

At this point the SARB would compare the remittance details with what was declared on the SAD500. This process thus serves as a control mechanism for exchange control purposes.

In future the current F178 process (which is a manual control mechanism where your bankers administer the receipt of export proceeds) will be abolished and only the abovementioned process will be followed.

The Balance of Payment (BOP) form (Integrated Form)

The SARB requires that all exporters and individuals receiving monies from abroad complete either a hard copy form or one in electronic format with details of the relevant transfer. This form is referred to as the Balance of Payment (BOP) form (integrated Form). The information on this BOP form is then captured by your bank and reported to the Reserve Bank via the CBFET system. The BOP form also serves as a legal document and payment instruction on which an exporter instructs his/her bankers to credit his/her account.

The purpose of the BOP and CBFET are essentially still the same as with the old Form E and that is to record the repatriation of foreign exchange received from abroad. As far as the BOP form is concerned, each individual commercial bank has its own version of the form, but which generally captures similar information. Click here to view an example of the BOP form.

Balance of Payments reporting

The BOP form is called this because it is used to capture foreign exchange transfer details which are used by the Reserve Bank to keep track of the country’s Balance of Payments (an economic concept used to record the in- and outflow of income, foreign currencies, as well as goods and services within a country). You will see that the BOP form has several different categories on the form to enable you to specify the nature of the income you have received. A BOP form may also be required to be completed when a company makes a payment (say, to pay for an import).

Click here to view an extract from the Reserve Bank Foreign exchange manual dealing with the F178 and the CBFET.
 
What does this mean for exporters?

The above explanation is really just to provide you with an overview of the roles of the BOP form and CBFET system in the context of South Africa’s exchange control environment. Ultimately, every exporter will still need to obtain a SAD500 form from Customs and approach their local bank to, (a) get their F178 form attested at the start of the export process, and (b) to complete the bank’s BOP form when receiving funds from abroad. You really do not need to know how this system works; your bank will advise you what you need to do. If you intend exporting regularly, try to establish a good working relationship with your bank from day one – this is crucial!

Forms for Exchange Control

• Form F178 - Exchange Control Declaration i.r.o. exports.
• Form MP79(a) - Exchange Control Questionnaire. Exemption from Reg 3(1)e and/or 3(1)(f).
• Form NEP - Declaration i.r.o. Goods leaving the (Common Monetary Area - CMA) without accrual of foreign exchange.
• Exchange Control Manual - The South African Reserve Bank provides a complete downloadable Exchange Control Manual.
• Example of the BOP form
• Procedures for import/export transactions - The Exchange Control Department of the South African Reserve Bank provides procedures for the import and export transactions of corporates. PDF document.

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