SARS is coming after these wealthy South Africans

SARS is tightening enforcement on wealthy South African expatriates, warning that failing to formally cease tax residency could leave high-income earners abroad facing unexpected local tax liabilities.

According to the 2025 Henley Private Wealth Migration Report, South Africa is projected to lose approximately 250 dollar-millionaires in 2025 alone, signalling a continued outward migration of high-income individuals.

Despite this, the number of taxpayers formally ceasing tax residency with the South African Revenue Service (SARS) to protect their worldwide income from local taxation appears to be declining.

This is according to Tax Consulting SA’s team lead of cross border taxation, John-Paul Fraser, and process specialist of expatriate tax, Shuanita de Wet.

“This may be a costly oversight for wealthy South African expatriates in an era of stricter enforcement and fewer exemptions,” Fraser and De Wet said.

SARS is busy tightening its grip on compliance and eyeing higher revenue collection, with high earners firmly in the spotlight.

“The 2025 Budget Speech underscored the reality that individuals earning above R1 million per year remain the backbone of the country’s tax base,” they said.

In 2024/25, individual taxpayers in this income bracket represented 6.7% of registered taxpayers but contributed 46% of South Africa’s total personal income tax.

In 2025/26, that figure stands at an estimated 7.3% of taxpayers paying 48.6% of all personal income tax.

This shows the financial weight of South Africa’s tax system clearly rests heavily on the shoulders of high-income earners, Fraser and De Wet said.

“At the same time, tax professionals warn that this is also the group of taxpayers who are highly mobile and can easily move abroad,” they said.

Earlier in 2025, SARS Commissioner Edward Kieswetter revealed findings from the tax authority’s High Wealth Individual Unit (HWIU), which collects data on individuals owning more than R50 million in assets.

The unit found that about 2,800 individuals fit that category, with a combined R150 billion of assets offshore.

SARS increases its scrutiny

“SARS statistics reveal an interesting trend,” Fraser and De Wet said. “In 2014, 4,102 taxpayers earning above R1 million formally declared a change in tax residency.”

“By 2023, that number had dropped to 1,722 taxpayers. So, while a large number of South Africans are still believed to seek new opportunities abroad, fewer individuals are formally exiting the tax system.”

Fraser and de Wet pointed out that this raises an important question of whether all those who leave the country correctly update their tax residency status with SARS.

“If not, they may be in for an unpleasant surprise, as failing to formally cease tax residency can result in unexpected tax liabilities in South Africa, especially as SARS continues to cast its net wider,” they warned.

They said that, in practice, they are increasingly seeing SARS scrutinising taxpayers’ financial backgrounds.

SARS is making detailed requests for, among other things, company interests and involvement, company financials, rental income, capital gains tax calculations, and crypto-related information.

These requests often follow the submission of an application for a SARS Notice of Non-Resident Tax Status, which is the official confirmation that one has ceased to be a tax resident of South Africa.

“In this new era of enforcement, it is essential for South African expatriates and high-income earners to understand their tax obligations back home,” Fraser and De Wet said. “The assumption that it automatically ends at the border is no longer a safe one.”

How expats can safeguard their income

Fraser and De Wet explained that several legal options are available to South African expats to protect their worldwide income from local taxes.

These options apply whether the South African in question plans to leave the country temporarily or permanently. “Understanding these options is vital to ensure compliance and mitigate your tax liability in South Africa,” they said.

One of these options is the Section 10(1)(o)(ii) foreign employment income exemption, which can provide relief for South Africans working overseas.

This exemption is designed to prevent double taxation, but it comes with strict requirements, Fraser and De Wet explained.

This includes the requirement that the taxpayer must spend more than 183 days outside South Africa in a 12-month period, with at least 60 of those days being continuous.

Only employees qualify, and compliance with SARS conditions is essential. Independent contractors, consultants, and self-employed individuals are expressly excluded.

“If your intention is to cut ties completely, you must formally cease your South African tax residency on a permanent basis. This involves showing that you are no longer considered to be ordinarily resident for tax purposes,” they explained.

“Once residency is ceased, you are taxed in South Africa only on South African-sourced income, such as property rentals, rather than your worldwide earnings.”

South Africa’s network of double taxation agreements (DTAs) with other countries may offer protection to those who do not fit neatly into the abovementioned categories.

A DTA offers various mechanisms that taxpayers may rely on for relief, including temporarily ceasing tax residency. This also requires a formal application to SARS.

Importantly, Fraser and De Wet pointed out that this mechanism does not require taxpayers to declare that South Africa is no longer their home. They stressed that it is key for taxpayers to ensure their affairs are properly managed.

This is the case whether they rely on the foreign employment exemption, pursue formal cessation of permanent residency, or use a DTA to temporarily cease tax residency.

“Without the correct process, South Africans abroad risk remaining within the local tax net longer than expected. Protecting your wealth abroad starts at home with making an informed decision on formalising your tax residence status,” they said.