April 01, 2025
Merchanting for SA Businesses: Key Rules and Compliance
What is a Merchanting?
Merchanting occurs when a South African business buys goods from a foreign supplier and sells them to a foreign buyer without the goods entering South Africa. These transactions enable local companies to engage in global trade without handling goods directly. However, they are subject to strict regulations, particularly concerning currency exchange.
Since merchanting involves foreign currencies, businesses must comply with South African Reserve Bank (SARB) regulations.
Key requirements include:
- Use of Authorised Dealers
- All transactions must go through a bank or foreign exchange intermediary that is registered as an authorised dealer.
- Payments must be in foreign currency, and receipts must match outgoing payments.
- Approval for Large Transactions
- Transactions exceeding a set threshold need SARB approval.
- Ensure all deals are documented to avoid regulatory issues.
- Goods Must Stay Outside South Africa
- Merchanting is only valid if the goods never enter the country.
- Customs declarations are not required, but contracts and invoices must be kept.
- Tax and Reporting
- Profits from merchanting are taxable in South Africa.
- VAT may apply, depending on the transaction structure.
- Anti-Money Laundering (AML) and Know Your Customer (KYC) Rules
- Businesses must verify their customers and suppliers.
- Any suspicious activity must be reported to the Financial Intelligence Centre (FIC).
Documents required for merchanting transaction:
- Invoice from the foreign seller to the South African company.
- Invoice from the South African company to the foreign buyer.
- Proof of payment from the foreign buyer to the South African company.
Why it matters
Staying compliant ensures your business avoids legal trouble and operates smoothly in international markets. By understanding and following merchanting rules, South African businesses can take advantage of global trade opportunities while mitigating risks.
Get Started Today
At Currency Partners, we help businesses navigate SARB’s exchange control regulations, manage foreign exchange risks, and optimise cross-border payments. Our team manages foreign exchange risks, facilitates seamless cross-border payments, and provides strategic advice on currency conversion timing to optimise costs and ensure compliance.
For assistance with merchanting transactions, contact our specialist Business team at enquiries@currencypartners.co.za or +27 21 203 0081.
SPEAK TO AN EXPERT
