Round 1: RSA Government vs RSA Expats

The South African Government is getting into the ring with the South African expats and – this is a fight not to be missed. Miaau! The Government cat is hungry.

In the left corner, weighing in at a substantial amount due to obvious reasons, is the South African Government. In the right corner we have those who left the South African soil and – these expats are shielding their hard earned international money like a hen protecting her chicks from a  the hungry Government cat.

From the side this it most certainly looks like a mismatch, but the hen has the gift of time on her hands. Will she make use of her options and protect her young? Or will the cat bombard her with new regulations and establish a new flow of resources? Read below to find out…

During the February 2020 Budget Speech, the National Treasury announced that the exchange control position is to be phased out as of 1 March 2021 and it would be replaced by a verification process.


Before we can answer the question, “Will this redefine formal emigration as we know it” it’s pivotal to understand the definition and implications of formal emigration. Formal Emigration is the process where your status as a resident change to non-resident for exchange control purposes in South Africa.

This process should allow South Africans who work abroad, more flexibility. But what does the new tax bill really mean for former South Africans and those in the process of formal emigration?


 RSA Resident                    —–>    Formal Emigration —->          Non-RSA Resident

(One can withdraw your lump-sum annuity before the age of 55) (Individual might not pay Tax in RSA)

(Pays Tax in RSA)                                                                          New Rules as of March 2021

 RSA Resident                    —–>    Tax emigration —->                 Non-RSA Tax-Resident

(One MIGHT be able to withdraw your lump-sum annuity) (Individual might not pay Tax in RSA)

Other changes the new tax bill will implement:

Both RSA and Non-RSA residents pays tax in SA without Tax emigrations (depending on the jurisdiction)

Both are treated the same when it comes to cross border transactions

No more blocked accounts for non-residents investing in RSA.

In short, bringing money into the country is easy, taking money out is hard. How hard, do you ask? You will be trailed and errored through several tests.

Anti-money laundering test

Risk management test

Tax status and source of income test

While the new tax bill is being put into place, the SARS procedures for formal emigration, in determining non-residency, will still be in accordance with the ordinarily resident and physical presence tests. However, it is important to consider that the National Treasury specifically mentioned that the tax treatment of individuals will be strengthened, following the new regime requiring South African expats to pay tax on their foreign employment income when it exceeds R1,25 million.

The new proposed bill aims to encourage South Africans who work abroad, to keep ties with the country thus asking the hen to step away from her chicks.


At the moment one can access his/her retirement annuity before the age of 55, with the new tax bill being proposed, an individual will still be able to access their retirement funds, but there will be a waiting period of at least three years. Unfortunately, this could mean that your Rand will be tangled up, for longer than anticipated, giving the fat farm cat some extra time to establish what percentage of your chicks he is going to pounce on.

By now it is common knowledge that the Government intends to dip into the retirement and pension funds for some desperately needed streams of income. If you have not yet Formally Emigrated as from 1 March 2021 your savings will be locked up in SA for three years before you can access them. It is like trusting the hungry farm cat to please be disciplined and not harm your chicks while you are away working towards a better future?!

We urge all our expats who have no intention to return to South Africa, to start the process of formal emigration. If you don’t act soon, you will be too late to Formally Emigrate and will have to comply with the new rules and regulations.

For a free, non-obligatory consultation, contact us today: | +27 (0) 87 135 5978