In a significant move to bolster dwindling state coffers, the National Treasury and the South African Revenue Service (SARS) have proposed a series of tax amendments, including a pivotal change that would remove a key exemption for South Africans working abroad.
The draft legislation, now open for public comment, forms part of Finance Minister Enoch Godongwana’s broader strategy to tighten tax loopholes and ensure fairness in the system. The most notable proposal is the removal of the tax exemption on foreign retirement funds, a benefit long utilized by expatriates.
“This is an exemption that’s been in place for a very long time,” a treasury official stated, framing the amendments as part of an “annual housekeeping process” aimed at creating a cleaner and more equitable tax system.
If passed, the change would have a substantial impact on South African professionals saving for retirement while working overseas. Currently, individuals who are non-tax residents can cash out their full retirement lump sum and transfer it out of the country without incurring South African tax. The new amendment would see those funds taxed upon the individual’s return to South Africa, effectively re-triggering their tax residency status.
Tax experts anticipate a potential surge in individuals cashing out their pensions before the law takes effect. “What I do foresee is that’s going to pick up drastically,” one analyst commented, suggesting a rush to utilize the existing exemption before it potentially falls away.
The government’s push, however, is facing criticism from labour unions and analysts who argue it targets the wrong demographic amidst a severe unemployment crisis.
The General Industries Workers Union (GIWU) condemned the move, stating that the government is focusing on citizens forced to seek opportunities abroad due to a lack of jobs at home. This sentiment is echoed by recent data from the PPS for Professionals Student Confidence Index, which found that six in ten students and graduates are considering opportunities overseas because of unemployment.
“People imagine that people working outside are actually rich, predominantly white people… But the reality is… many young people in this country from working class backgrounds… are forced to leave the country,” a union representative said, highlighting that professions like teaching and nursing are among those seeking better prospects abroad.
The Centre for Risk Analysis further warned that Treasury’s bid to widen the revenue net must be carefully balanced to avoid deepening inequality. The group presented stark figures showing the rapid deterioration of the country’s employment landscape. In 2015, there were 250 people not working for every 100 that were employed. A decade later, in 2025, that number has risen to 275 unemployed for every 100 working.
Experts conclude that while closing tax loopholes is necessary, sustainable revenue growth hinges on more than just reform. The ultimate solution, they say, lies in boosting real, inclusive economic growth to bring more people into the economy and, by extension, into the tax base.