Global Mobility Tax

South Africa | Tax update on withdrawal of foreign pension exemption

Summary

The Taxation Laws Amendment Bill 2025 proposed the removal of the exemption of foreign pensions received by tax residents with effect from 1 March 2026.

The detail

Proposed Amendment in the Taxation Laws Amendment Bill 2025

In the draft Taxation Laws Amendment Bill issued in August 2025, the deletion of the exemption contained in Section 10(1)(gC)(ii) of the Income Tax Act whereby foreign sourced pensions / retirement benefits received by or accruing to South African tax residents are exempt for Income Tax purposes in South Africa was proposed.

Decision made by National Treasury

The Amendment bill was released for public comment in September 2025. Following this process, National Treasury released their response document to the amendments proposed in the Taxation Laws Amendment bill on 4 November 2025.

The following comments/proposals were made in response to the removal of the exemption:

• South Africa risks diminishing its attractiveness as a retirement destination. Expats and foreign retirees make meaningful contributions to the economy through consumption and VAT, and the repeal may discourage these retirees from choosing to retire in South Africa.
• Repealing the exemption will potentially result in the double taxation of foreign retirement benefits.
• Stakeholders proposed retaining the exemption in its current form or limiting it to individuals who retire before 2026.
• Another proposal was to potentially include partial exemptions and postponing the effective date by three years.

The final decision made by National Treasury was to withdraw the proposed amendment at this stage. However, they have stated that consultation on this proposal will continue to be conducted. Any future changes in policy will look to ensure a balanced approach which addresses both the concerns raised by the public stakeholders and governments concerns regarding the double non-taxation of foreign retirement benefits.

Contact us

For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:

Kesiree Mari
Director – South Africa

Craig Willson
Manager – South Africa

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