SARS warning for South Africans who are leaving the country

Experts have warned that expats who fail to formally cease their tax residency risk being taxed on their worldwide income years later when accessing funds or triggering a SARS review.

This was explained by Tax Consulting SA’s Legal Manager of Cross Border Taxation, Delano Abdoll, and Tax Legal Associate, Tasmin Kotze.

The South African Revenue Service (SARS) is expected to crack down on individual expats who remain non-compliant, Abdoll and Kotze said.

This means that South Africans living abroad and who have renounced their South African citizenship should take note that this step does not automatically end their tax obligation in South Africa.

“From a tax-law perspective, this assumption is incorrect and can expose individuals to significant liabilities, often only years after leaving the country,” they warned.

“The issue arises from a fundamental misunderstanding of the distinction between citizenship status and tax residency status under South African law.”

For this reason, Abdoll and Kotze stated that a proactive tax residency assessment is often the only way for former South African citizens to prevent unexpected tax exposure when they eventually wish to access their funds.

Going into 2026, expatriates should reassess their position through the lens of SARS to ensure that they avoid any unpleasant surprises.

“Citizenship is administered by the Department of Home Affairs. Tax residency, however, is determined independently by SARS and is governed by the Income Tax Act,” Abdoll and Kotze said.

“There is no legal mechanism requiring Home Affairs to notify SARS when citizenship is renounced. As a result, SARS does not automatically amend a taxpayer’s residency status.”

According to Abdoll and Kotze, an individual may therefore cease to be a South African citizen while remaining a South African tax resident. This means SARS will tax them on their worldwide income.

“In practice, many individuals remain unaware of this exposure for years, only discovering it when a trigger event leads SARS to query their status,” they said.

This may include the withdrawal of retirement or preservation funds still held in South Africa, the transfer of capital offshore, and an application for tax clearance.

It could also include an expat’s attempts to regularise historical tax affairs or the consideration of retiring in South Africa.

“At that stage, SARS may still regard the individual as a tax resident if they have not followed the formal process of ceasing tax residency,” they said.

“This can result in assessments on worldwide income, retrospective compliance reviews, exit tax consequences, and the imposition of interest and penalties.”

Protection income for expats

Abdoll and Kotze explained that SARS assesses tax residency independently of citizenship status. SARS applies the ordinarily resident test, which essentially looks at whether South Africa is the person’s usual place of abode.

It also applies a physical presence test, which is based on the number of days physically present in South Africa during specified periods over several years.

Where relevant, SARS also considers the application of Double Taxation Agreements between South Africa and other jurisdictions.

The residence and physical presence test are based on South African domestic law, and the consideration of double taxation agreements is based on international treaty law.

“The cessation of tax residency is a factual enquiry aimed at achieving a legal determination,” Abdoll and Kotze explained.

“It requires an analysis of an individual’s personal, economic, and social ties, together with appropriate disclosure to SARS.”

If this process does not take place, an individual’s residency status may remain unchanged on the revenue service’s records.

“From a legal perspective, renouncing citizenship does not remove an individual from South Africa’s residence-based tax system, nor does it extinguish tax compliance obligations,” they explained.

Importantly, Abdoll and Kotze said non-citizenship does not equate to automatic non-residency for tax purposes.

“SARS generally reassesses residency only when prompted by a relevant event, and as such, incorrect assumptions may go undetected for years, until a taxpayer seeks to access funds or formalise their tax position,” they said.

“For individuals who have renounced South African citizenship, or are considering doing so, an independent assessment of tax residency remains a necessary step.”

Abdoll and Kotze warned that waiting until a trigger event occurs often removes planning options and places the individual in a reactive position with SARS.

“An independent residency review allows risks to be identified, corrected, and, where necessary, disclosed on controlled terms,” they said.

“Expatriate tax matters require careful planning and accurate legal analysis. Decisions taken at the time of departure, or not taken at all, can have long-term compliance and financial implications.”