Wealthy taxpayers ditch South Africa
South Africa’s economy is facing increasing pressure as more high-net-worth individuals decide to end their South African tax residency in search of better investment, income, and lifestyle opportunities abroad.
In SARS’ 2024 Tax Statistics, the revenue service reported that 38,000 South Africans have ceased their tax residency, leading to an estimated R3 billion loss in tax revenue.
There are a number of reasons why a South African may end their tax residency in the country, Chavaughn Phillips, Expatriate Tax Specialist at Tax Consulting South Africa, explained to Daily Investor.
“Ending tax residency in South Africa is a formal process followed with SARS to ensure your tax obligations in South Africa change from taxable on worldwide income, to taxable only on South African sourced income,” Phillips said.
“A South African taxpayer may no longer need to pay tax where non-residency has been formalized, no income is received, tax exemptions or relief is claimed, retirement purposes, pensioners or death.”
According to Phillips, there are both positive and negative implications to ending your South African tax residency.
On the positive side, it provides protection for the full foreign income received and ensures that foreign assets acquired after the effective date are exempt from South African taxation.
It also facilitates compliance with SARS and offers additional financial benefits, such as early withdrawal of certain retirement funds, reduced dividends tax, exemption from donations tax, and avoidance of double taxation.
However, there are drawbacks. Non-residency can trigger a deemed disposal tax on worldwide assets as of the day before the effective date, and offshore remittances, even under R1 million, may require SARS clearance.
While individuals may feel the benefits of ending their tax residency, the downsides affect the entire South Africa economy.
As more South Africans end their tax residency, the country may face decreased investment and potential economic decline.

This negative economic effect is compounded by the high number of wealthy South Africans who have been ending their South African tax residency.
In 2023 alone, 1,700 millionaires left the country, which represents R5 billion in taxable income and almost R2 billion in assessed tax.
“As a result of better investment, income, and lifestyle opportunities abroad, we believe that these people are highly likely to change their tax residency status to be exempt from foreign-sourced income and avoid double taxation,” Phillips said.
Better opportunities abroad also play a significant role in the number of people abandoning their tax residency, with South Africans seeking improved living conditions and higher income potential.
However, there are also a number of other reasons why South Africans may end their tax residency, according to Phillips.
The desire to avoid double taxation on worldwide earnings, protection for foreign income exceeding R1.25 million, plans to permanently or temporarily leave South Africa, the need to meet global tax obligations, and the ability to withdraw retirement assets early are all reasons behind this growing trend.
Demographically, those ending their tax residency tend to fall within the Baby Boomer and Millennial generations, with many couples applying together when both meet the requirements, Phillips noted.
There are also other trends emerging which relate to the number of South Africans changing their tax residency.
“There are many misconceptions in the market that may mislead taxpayers in the wrong direction, and cause for rectification required at a later stage,” Phillips said.
Many South Africans migrate to tax havens where no or minimal tax is applied, while others are motivated by the desire for quality living conditions and better opportunities.
In response, SARS is developing an expatriate unit to ensure compliance and manage the increasing number of individuals formalising their non-residency, Phillips added.
Comments