Are wealthy South Africans abroad at risk of increased SARS scrutiny over tax residency?
Tax The South African Revenue Service (SARS) is cracking down on wealthy individuals, particularly those with assets abroad
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The South African Revenue Service (SARS) is cracking down on wealthy individuals, particularly those with assets abroad, as it ramps up efforts to boost tax compliance and close revenue gaps.
This is according to John-Paul Fraser and Shuanita de Wet, from Tax Consulting SA, who warn that many high-income earners relocating abroad are failing to formally cease their South African tax residency.
"This may be a costly oversight for wealthy South African expatriates in an era of stricter enforcement and fewer exemptions, where SARS is tightening its grip on compliance and eyeing higher revenue collection, with high earners firmly in the spotlight".
"The 2025 Budget Speech underscored the reality that individuals earning above R1 million per year remain the backbone of the country’s tax base".
According to the 2025 Henley Private Wealth Migration Report, South Africa is projected to lose around 250 dollar-millionaires this year alone.
They added that despite the continued outward migration of high-income individuals, the number of taxpayers formally ceasing tax residency with SARS to protect their worldwide income from local taxation appears to be declining.
SARS statistics show that in 2014, 4,102 taxpayers earning above R1 million formally declared a change in tax residency. By 2023, that number had dropped to 1,722 taxpayers.
"This raises the important question whether all those who leave the country correctly update their tax residency status with SARS.If not, they may be in for an unpleasant surprise, as failing to formally cease tax residency can result in unexpected tax liabilities in South Africa, especially as SARS continues to cast its net wider".
"The tax authority is no longer taking a passive approach to tax compliance. In practice, we increasingly see SARS scrutinising taxpayers’ financial backgrounds, with detailed request for among others, company interests and involvement, company financials, rental income, Capital Gains Tax calculations and crypto related information".
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