South Africa

The most significant recent changes impacting the taxation of individuals in South Africa are as follows:

• From a tax administrative perspective, effective from 1 December 2022, natural persons with outstanding income tax returns will be subject to fixed non-compliance penalties.
• The first phase of the two-pot retirement system, announced in 2023, is due to take effect on 1 March 2024. 
• The harmonisation of the tax treatment of payments to South African retirement funds to ensure consistent treatment of contributions, irrespective of the type of retirement vehicle that the person is a member of, was effective from 1 March 2016. The requirement that a provident fund will only be able to pay out one third of the value of the fund as a lump sum on retirement (with the remaining two thirds having to be annuitised) became effective on 1 March 2021.
• With effect from 1 March 2020, qualifying foreign employment income earned by South Africa tax residents is no longer fully exempt, as the exemption is limited to 1.25 million South African rand (ZAR). The amount above the ZAR 1.25 million exemption is subject to normal tax in South Africa at the tax rate for that particular year of assessment.
• Government announced that it intends to initiate treaty re-negotiations to ensure that South Africa retains taxing rights on payments from South African retirement funds post a change in tax residence (i.e. where an individual becomes a non-South African tax resident).
• All individuals who are provisional taxpayers with assets above ZAR 50 million will be required to declare specified assets and liabilities at market values in the 2023 tax returns.

• From 1 March 2021, the South African Reserve Bank (SARB) announced changes to the emigration processes for individuals, as well as the removal of blocked assets after emigration.

• As of 1 March 2021, in order to be eligible for early withdrawal of retirement funds on ceasing to be a South African tax resident, the individual must have been a non-resident for at least three consecutive years (with effect from 1 March 2021) and have proof that they are a tax resident in a foreign country (usually by providing a certificate of tax residence for that country).