With the South African Revenue Service (Sars) expected to crack down on individual expats who remain non-compliant, South Africans living abroad and who have renounced their South African citizenship should take note that this step does not automatically end their tax obligation in South Africa. From a tax-law perspective, this assumption is incorrect and can expose individuals to significant liabilities, often only years after leaving the country.

The issue arises from a fundamental misunderstanding of the distinction between citizenship status and tax residency status under South African law.

Therefore, a proactive tax residency assessment is often the only way for former South African citizens to prevent unexpected tax exposure when they eventually want to access funds. As we enter 2026, expatriates should reassess their position through the lens of Sars.

Citizenship and Tax Residency Are Legally Distinct

Citizenship is administered by the Department of Home Affairs. Tax residency, however, is determined independently by Sars and is governed by the Income Tax Act.

There is no legal mechanism requiring Home Affairs to notify Sars when citizenship is renounced. As a result, Sars does not automatically amend a taxpayer’s residency status. 

An individual may therefore cease to be a South African citizen while remaining a South African tax resident, meaning Sars will tax you on your worldwide income.

Why The Issue Often Emerges Later

In practice, many individuals remain unaware of this exposure for years, only discovering it when a trigger event leads Sars to query their status. This may include the withdrawal of retirement or preservation funds still held in South Africa, the transfer of capital offshore, an application for tax clearance,  attempts to regularise historical tax affairs, or the consideration of retiring in South Africa.

At that stage, Sars may still regard the individual as a tax resident if they have not followed the formal process of ceasing tax residency. This can result in assessments on worldwide income, retrospective compliance reviews, exit tax consequences, and the imposition of interest and penalties.

How Sars Determines Tax Residency

Tax residency is assessed independently of citizenship status. Sars applies the ordinarily resident test (in short, is South Africa your usual place of abode?) and the physical presence test (based on days physically present in South Africa during specified periods over several years), and where relevant, considers the application of Double Taxation Agreements between South Africa and other jurisdictions. The former tests being based on South African domestic law and the latter based on international treaty law.

The cessation of tax residency is a factual enquiry aimed at achieving a legal determination. It requires an analysis of an individual’s personal, economic, and social ties, together with appropriate disclosure to Sars. In the absence of this process, an individual’s residency status may remain unchanged on Sars’ records.

A Common Misconception with Legal Consequences

From a legal perspective, renouncing citizenship does not remove an individual from South Africa’s residence-based tax system nor does it extinguish tax compliance obligations. Importantly, non-citizenship does not equate to automatic non-residency for tax purposes. 

Sars generally reassesses residency only when prompted by a relevant event, and as such, incorrect assumptions may go undetected for years, until a taxpayer seeks to access funds or formalise their tax position.

What Expatriates Should Do Now

For individuals who have renounced South African citizenship, or are considering doing so, an independent assessment of tax residency remains a necessary step.

Waiting until a trigger event occurs often removes planning options and places the individual in a reactive position with Sars. An independent residency review allows risks to be identified, corrected, and, where necessary, disclosed on controlled terms. 

Expatriate tax matters require careful planning and accurate legal analysis. Decisions taken at the time of departure, or not taken at all, can have long-term compliance and financial implications.

Evaluating tax residency is about more than compliance, it is about income protection.

Written by Delano Abdoll, Legal Manager: Cross Border Taxation at Tax Consulting SA; and Tasmin Kotze, Tax Legal Associate at Tax Consulting SA