Message to South African taxpayers – get out while you can

The postponement of the 2025 Budget has heightened uncertainty among taxpayers, investors, and expatriates, with experts advising South Africans to consider ceasing their tax residency.

Tax Consulting SA’s expatriate tax specialist, Mbalenhle Mahlaba, explained that ex-pats, in particular, can take action while the country is in limbo.

“The unexpected postponement of the 2025 Budget is causing endless speculation as well as heightened unease and uncertainty among business owners, investors, as well as South African taxpayers about what the immediate future holds,” she said.

This is especially true for South African expatriates who have already moved abroad or are considering relocating since the Budget postponement highlights the importance of breaking tax ties with the country, essentially ceasing their tax residency.

“South African expatriates who have not yet formalised the cessation of their tax residency may find this period of uncertainty the ideal time to act because ceasing tax residency can help avoid more complex issues in the future,” Mahlaba said.

She explained that ending your South African tax residency can be a smart move in uncertain times.

“For South Africans who have not yet ceased their tax residency, either temporarily under a Double Tax Agreement (DTA) or permanently through financial emigration, now may be the right time to take action,” she said.

Both processes require a formal procedure with the South African Revenue Service (SARS).

Financial emigration means that you have permanently severed your tax ties with South Africa.

In other words, SARS is limited to taxing only your income from South African sources and may not rather tax your worldwide income.

“On the other hand, the DTA allows you to be temporarily considered a non-resident in South Africa for the relevant years of assessment, designed to avoid double taxation,” Mahlaba explained.

“For those contemplating this move, now may be the time to act as South Africa’s economic landscape remains unpredictable.”

Economic reforms, tax policies, and social welfare initiatives all hang in the balance, Mahlaba said, with many questioning whether the government is capable of fulfilling its promises in the face of internal disruption.

“After the postponement was announced, Finance Minister Enoch Godongwana said cabinet is united in the view that the Budget must strike a balance between the interests of the public, economic growth and fiscal sustainability,” she said.

“Despite this, markets reacted sharply, and many questioned whether the GNU is prepared to address the mounting challenges facing the country.”

Mahlaba added that while the world remains uncertain, it’s crucial not to leave your tax situation in the same state of limbo as created by the postponement of the Budget to 12 March 2025.

“This unprecedented turn of events left the country grappling with uncertainty at a time when clarity and decisive actions are more critical than ever,” she said.

“The postponement, coming at a time of political tensions and economic challenges, underscores the growing sense of treading water that has plagued South Africa’s leadership under its first Government of National Unity and left taxpayers frustrated.”

Mahlaba warned that, due to the postponement, South Africa is at risk of economic stagnation.

“While the full impact of this political paralysis and the potential for economic stagnation are difficult to predict, the longer the country remains in limbo, the harder it becomes to reverse the damage caused by delayed reforms and decisions,” she said.

“Taxpayers, who have been patiently awaiting improvements in social services, increased subsidies, or other government interventions, will be left disappointed.”

Mahlaba recommended that while the public waits for political clarity, taxpayers should take a proactive approach to their circumstances.

“The uncertainty surrounding the government’s direction calls for careful consideration and action in both personal and financial matters,” she said.

“It’s important to prepare for the possibility that the nation’s future may remain unclear for some time to come.”

“For those in the private sector, diversifying investments and exploring international opportunities may be a prudent move.”

“Now could be the right time to look beyond the borders of a country in flux and seek greater security elsewhere.”