SARS warning for wealthy taxpayers leaving South Africa

High-net-worth South Africans who leave the country without formally ending their tax residency risk being taxed on their worldwide income, as increased global data sharing makes “silent exits” costly.

This is according to Tax Consulting South Africa’s team lead for cross-border taxation, John-Paul Fraser, and expatriate tax consultant, Vivian Cox.

“More and more high-net-worth South Africans living abroad realise the assumption that physical emigration ends their South African tax exposure is not merely incorrect – it is increasingly expensive,” Fraser and Cox said.

“Many expatriates only become aware of the consequences once they are confronted with an unexpected and substantial assessment from the South African Revenue Service (SARS).”

South Africans continue to make what can be described as a “silent exit” by relocating offshore and structuring income and assets abroad.

However, they never formally renounce South African tax residency, which leaves them exposed to SARS taxing their worldwide income.

South Africa operates on a tax residency-based system, which means that if SARS regards someone as a South African tax resident, their worldwide income and gains remain taxable locally.

This is the case irrespective of where the taxpayer lives, invests, or operates. “Physical absence alone does not sever tax residency,” Fraser and Cox warned.

“Without a formal application to SARS confirming that you are ceasing South African tax residency and supporting evidence, many expatriates unknowingly remain fully liable.”

They stressed that South African taxpayers should not assume they are off the radar simply because they have left the country.

The taxman’s scrutiny is only set to increase, since SARS has shifted decisively from passive enforcement to data-driven risk profiling.

It is now focusing on taxpayers whose declared residency status appears inconsistent with their financial footprint and cross-border activity.

Unprecedented visibility of offshore wealth

On 16 February 2026, SARS published its Automatic Exchange of Information (AEOI) document, confirming the automatic sharing of data with over 100 countries.

The AEOI framework is a central mechanism for exchanging taxpayer information, incorporating the Common Reporting Standard (CRS) protocols and the United States Foreign Account Tax Compliance Act (FATCA).

Under CRS, foreign financial institutions report account balances, investment income, capital gains and identifying details to their local tax authorities, which then exchange this information with SARS.

Where a South African tax reference number, identity number, or historical linkage exists, SARS can readily detect undeclared income, unexplained asset growth or inconsistencies with claimed non-residency.

Beyond CRS and FATCA, SARS integrates exchanged data with domestic and third-party information and applies sophisticated risk profiling to high-net-worth individuals. Key sources include –

• Offshore bank accounts, investment portfolios and custodial holdings disclosed through AEOI
• Trusts, foundations and nominee structures identified through beneficial ownership reporting
• Ongoing South African banking relationships and transactional activity
• Local property ownership, rental income and financing
• Shareholdings, directorships and private company interests
• Insurance policies, medical aid membership and vehicle registrations
• Lifestyle indicators inconsistent with declared non-residency or offshore income profiles

Assessed collectively, Fraser and Cox said these data points enable SARS to identify silent exits, challenge asserted non-residency and pursue retrospective tax exposure with confidence.

Taken together, these indicators reinforce the importance of full tax compliance and proper income disclosure in the relevant jurisdictions.

“For South Africans – particularly high-net-worth expatriates – they serve as a clear incentive to formalise non-tax residency status,” they said.

Millions leave, but few cut tax ties

Over the past decade, an estimated one million South Africans have moved abroad. However, SARS data paints a more revealing picture regarding tax residency, Fraser and Cox said.

According to the 2025 Tax Statistics bulletin published by SARS and National Treasury, just over 51,500 individuals formally declared they had ceased to be South African tax residents between the 2017 and 2024 tax years.

“The gap between those leaving the country and those officially ending their tax residency is significant,” they said. “Many may be relocating physically, but far fewer complete the formal process required to break tax residency.”

This trend is particularly noticeable among high-income professionals and business owners, whose ability to earn and invest globally makes relocation easier.

The BRICS Wealth Report 2024 revealed a 20% decline in South Africa’s millionaire population over the past decade.

The reality is that wealth is moving, not just people – making it all the more important to protect your worldwide wealth while remaining compliant.

Fraser and Cox warned that, for high-net-worth expatriates, the consequences of making a silent exit are rarely limited to a single tax year.

Once SARS identifies an undeclared cessation of residency, it may reassess multiple prior years, potentially triggering –

• Tax on previously undisclosed foreign income and gains
• Interest compounded over several years
• Significant understatement penalties
• Extended prescription periods where non-disclosure is alleged
• Escalation to criminal investigation in extreme cases

Complex structures, offshore vehicles, and layered investments, while legitimate, often attract deeper scrutiny rather than protection.

“Formally ceasing South African tax residency is not merely an administrative exercise – it is a strategic event with lasting consequences,” Fraser and Cox said.

“When handled correctly, it establishes a defensible legal breakpoint, aligns SARS’ records with reality, and triggers the appropriate exit tax treatment at a controlled point in time.”

Handled poorly or ignored, they said it leaves taxpayers exposed to retrospective challenge, often when offshore income and asset values have materially increased.

“In today’s tax environment, there are few blind spots and even less tolerance for assumptions. SARS’ visibility extends far beyond South Africa’s borders and, with greater wealth, comes greater scrutiny and consequence,” they said.

“For high-net-worth expatriates, the question is no longer whether SARS can see you, but whether your position will withstand scrutiny.”