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National Treasury pauses foreign pension tax plan for consultation
South Africa’s National Treasury has put its plan to tax foreign pensions on hold. The proposal drew sharp criticism from retirees, tax specialists, and advisers. Treasury says it will consult more broadly before deciding what to do next.
What Treasury wanted to change
The pause concerns a draft change in the 2025 Taxation Laws Amendment Bill. Treasury had proposed deleting section 10(1)(gC)(ii) of the Income Tax Act. That clause currently lets South African tax residents receive certain pensions, annuities, and lump sums from foreign sources without paying local tax.
Treasury argues that the rule can create double non-taxation. In some cases, the foreign country does not tax the income. South Africa also does not tax it under the exemption. The government says this erodes the tax base and wants a more balanced approach.
Why the backlash was immediate
Retirees with long-term plans anchored to the current exemption raised urgent concerns. Cross-border tax practitioners warned that an abrupt shift could leave people exposed late in life. Financial planners flagged confidence risks for returning expatriates and for investors weighing South Africa as a destination. The message from the public process was clear. Do the homework with the people affected. Then propose a fix that avoids collateral damage.
What is true right now
The exemption in section 10(1)(gC)(ii) remains in place. Treasury has paused the amendment and will hold further consultations with stakeholders. Officials have indicated the original goal was to protect South Africa’s taxing rights and to close gaps that allow income to fall through the cracks. The door remains open to a revised measure once the process is complete.
What this means for families and planners
For retirees drawing income from abroad, the pause offers breathing room. It also signals that any future change will likely include lead time and clearer rules. For financial planners and employers, it is a chance to table evidence on how options such as targeted anti-avoidance rules, thresholds, or treaty-aligned solutions could protect revenue without harming ordinary pensioners.
A better path is possible
South Africa can defend its tax base and still honour the plans people have made in good faith. The test now is whether consultation produces a practical compromise. One that limits double non-taxation where it truly occurs. One that gives retirees certainty. And one that keeps South Africa attractive to skilled South Africans who want to come home.
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Source: Business Tech
Featured Image: News24
