{"id":841897,"date":"2025-11-04T14:00:00","date_gmt":"2025-11-04T12:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=841897"},"modified":"2025-11-04T13:55:00","modified_gmt":"2025-11-04T11:55:00","slug":"national-treasury-withdraws-controversial-pension-tax-proposal-for-now","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/finance\/841897\/national-treasury-withdraws-controversial-pension-tax-proposal-for-now\/","title":{"rendered":"National Treasury withdraws controversial pension tax proposal \u2014 for now"},"content":{"rendered":"\n

The National Treasury has withdrawn its plan to remove the tax exemption on foreign pensions for South African tax residents, for further consultation.<\/p>\n\n\n\n

However, it has made it clear that the matter could be revisited in a revised form once the consultation process is complete.<\/p>\n\n\n\n

This decision comes after strong public opposition and warnings from experts about the negative economic effects.<\/p>\n\n\n\n

The proposal, published in August 2025 as part of the draft Taxation Laws Amendment Bill (TLAB), aimed to delete section 10(1)(gC)(ii) of the Income Tax Act. <\/p>\n\n\n\n

This section currently allows South African residents to receive pensions, annuities, and lump-sum payments from foreign sources without paying local tax.<\/p>\n\n\n\n

During a virtual meeting of the Standing Committee on Finance on 4 November 2025, Treasury Deputy Director-General Chris Axelson confirmed that the amendment had been withdrawn. <\/p>\n\n\n\n

He said Treasury had expected pushback and would now follow a more consultative approach before deciding on any future changes. <\/p>\n\n\n\n

Tax Consulting South Africa, which opposed the proposal, welcomed the decision.<\/p>\n\n\n\n

John-Paul Fraser, the firm\u2019s team lead for Cross-Border Taxation, told the committee in October that removing the exemption would have serious consequences for retirees and expatriates.<\/p>\n\n\n\n

He said the change would effectively rewrite the rules for people who had planned their financial futures around the current law. <\/p>\n\n\n\n

\u201cThey would unexpectedly go from zero tax to full tax, potentially leaving retirees financially exposed in their later years,\u201d Fraser said. <\/p>\n\n\n\n

He added that scrapping the exemption could make South Africa less attractive for foreign retirees, discourage South Africans abroad from returning home, and reduce investment in the country.<\/p>\n\n\n\n

Axelson acknowledged these concerns in his briefing to the committee. He explained that Treasury\u2019s original goal was to protect South Africa\u2019s taxing rights and prevent the South African Revenue Service (SARS) from losing potential revenue. <\/p>\n\n\n\n

Exemption may not be sustainable in the long run<\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

The exemption was meant to be temporary, and Treasury had always planned to review it. However, Axelson made it clear that while the amendment has been withdrawn, the issue is not closed. <\/p>\n\n\n\n

\u201cTreasury is still concerned that South Africa is giving up its taxing rights on foreign pensions and that the law creates instances of double non-taxation,\u201d he said. <\/p>\n\n\n\n

\u201cGovernment will now start a new consultative process with stakeholders to find a balanced approach that addresses these concerns while also protecting retirees and investors.\u201d<\/p>\n\n\n\n

Treasury\u2019s concern has been that in some cases, the exemption allows for double non-taxation\u2014where neither the foreign country nor South Africa taxes the pension. <\/p>\n\n\n\n

This could happen when South Africa waives its taxing rights under a double tax agreement (DTA) while the foreign country also chooses not to tax the income.<\/p>\n\n\n\n

Despite this concern, the proposal faced strong opposition during the public comment period. <\/p>\n\n\n\n

Stakeholders warned that removing the exemption without enough data or analysis would damage confidence in South Africa\u2019s tax system and discourage foreign investment. <\/p>\n\n\n\n

They said it would make the country less appealing to skilled expatriates and retirees, many of whom contribute significantly to the economy through spending and investment.<\/p>\n\n\n\n

Critics also noted that people nearing retirement had made long-term financial decisions based on the existing exemption. Removing it now, they argued, would be unfair and could leave retirees struggling financially.<\/p>\n\n\n\n

Following Treasury\u2019s announcement, Fraser said the withdrawal shows that the department has listened to these concerns. <\/p>\n\n\n\n

\u201cBy withdrawing the amendment and opting for extended consultation, Treasury is signalling that it wants to fully understand the impact of any change before moving forward,\u201d he said.<\/p>\n\n\n\n

While Treasury still believes that the current exemption may not be sustainable in the long run, its decision to pause and consult widely has been welcomed by taxpayers and financial experts. <\/p>\n\n\n\n

The department plans to engage with industry bodies and stakeholders to find a fair compromise that protects both the country\u2019s tax base and the financial security of retirees.<\/p>\n","protected":false},"excerpt":{"rendered":"

The National Treasury has withdrawn its plan to remove the tax exemption on foreign pensions for South African tax residents, but may revisit the issue after the consultation process.<\/p>\n","protected":false},"author":92,"featured_media":820023,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11121],"tags":[3796,853,23540],"class_list":["post-841897","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-finance","tag-national-treasury","tag-south-africa","tag-the-draft-taxation-laws-amendment-bill-tlab"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/841897","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/92"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=841897"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/841897\/revisions"}],"predecessor-version":[{"id":841915,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/841897\/revisions\/841915"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/820023"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=841897"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=841897"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=841897"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}