National Treasury reverses controversial plan to scrap foreign pension tax exemption
The National Treasury has stepped back from its plan to remove the tax exemption on foreign pensions received by South African residents
Image: Jairus Mmutle | GCIS
The National Treasury has stepped back from its plan to remove the tax exemption on foreign pensions received by South African residents, for further review and consultation.
The measure, first published in August 2025 as part of the draft Taxation Laws Amendment Bill (TLAB), proposed removing section 10(1)(gC)(ii) of the Income Tax Act, which currently allows residents to receive foreign retirement benefits tax-free.
Treasury Deputy Director-General Chris Axelson confirmed that the amendment had been withdrawn and that the government will allow for a consultative approach before any changes are made.
The proposal had faced strong criticism from tax experts, who warned that removing the exemption could have negative economic and financial consequences for retirees and expatriates.
The South African Institute of Taxation (SAIT) welcomed the decision, saying it preserves South Africa’s attractiveness as a retirement destination and allows for further engagement with stakeholders to find a balanced approach.
"The South African Institute of Taxation (SAIT) welcomes the National Treasury’s decision to partially withdraw the proposed repeal of Section 10(1)(gC)(ii) of the Income Tax Act, a move that safeguards South Africa’s attractiveness as a retirement destination and mitigates potential harm to the local economy".
The group had also opposed the treasury's move, with its Deputy CEO, Keitumetse Sesana, telling parliament last month that “removing this exemption could discourage skilled professionals and foreign retirees from settling in South Africa”.
"The revised position by Treasury follows extensive consultation and demonstrates the value of stakeholder engagement in shaping fair, transparent, and growth-oriented tax policy".
“We appreciate the Treasury’s willingness to engage constructively with industry stakeholders,” added Sesana. “SAIT remains committed to contributing technical insight and balanced perspectives to ensure our tax framework supports both fiscal objectives and economic inclusion.”
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