Explore how South African expatriates can navigate tax residency amid the uncertainty of the postponed 2025 Budget and the implications for their financial future. File photo.
By: Mbalenhle Mahlaba
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.
Maybe even more so for South African expatriates who have moved abroad and those considering relocating to another country, as the Budget postponement also brings the important consideration of breaking tax ties with South Africa – in essence ceasing tax residency in South Africa – to the fore.
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.
Ceasing your South African tax residency: 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. Both processes require a formal procedure with the South African Revenue Service (Sars).
Financial emigration signifies that you have permanently severed your tax ties with South Africa, limiting Sars to taxing only your income from South African sources, rather than 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. For those contemplating this move, now may be the time to act as South Africa’s economic landscape remains unpredictable.
Is the political instability driving the uncertainty?
Economic reforms, tax policies, and social welfare initiatives all hang in the balance, 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 the Cabinet is united in the view that the Budget must strike a balance between the interests of the public, economic growth, and fiscal sustainability. Despite this, markets reacted sharply and many questioned whether the GNU is prepared to address the mounting challenges facing the country.
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 March 12, 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. 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 (GNU), and left taxpayers frustrated.
The risk of economic stagnation
Due to this postponement, South Africa risks enduring the consequences of continued delays. 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.
Taxpayers, who have been patiently awaiting improvements in social services, increased subsidies, or other government interventions, will be left disappointed.
What should the public do? Do the disagreements conclude momentous changes to be expected
While the country waits for political clarity, taxpayers must 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. 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.
* Mbalenhle Mahlaba is an expatriate tax specialist at Tax Consulting SA.
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