If you’re a South African expat planning to withdraw your retirement annuity, there’s an important regulatory change you need to know about. The South African Revenue Service (SARS) has introduced a new tax directive system that significantly impacts how non-residents can access their retirement funds. This update changes the process for withdrawing lump sums and shifts how non-residency is confirmed for tax purposes.
What is a tax directive in South Africa?
A tax directive is an instruction issued by SARS that tells a fund administrator how much tax to deduct when you receive a lump sum from a retirement annuity, life annuity, living annuity, or other retirement-related product. For South African expats, tax directives are essential for withdrawing funds under the correct tax treatment as non-residents.
Previously, expats relied on an Emigration Tax Compliance Status (TCS) PIN – often referred to as a tax clearance certificate in South Africa – as proof that they had formally emigrated for tax purposes. However, this is no longer sufficient under the new rules.
Read more: Simplifying South African tax directives for expats: what they are and why they matter.
What has changed in the tax directive process?
From April 2024, SARS now requires non-resident taxpayers to provide a Non-Resident Tax Status Confirmation Letter when applying for a tax directive. This is a shift away from using the TCS PIN. Even if you previously completed tax emigration and were issued a TCS PIN, you are now required to reconfirm your non-resident status by manually applying for this formal confirmation letter from SARS.
The new process applies to all retirement interests held in South Africa, including:
- Retirement annuities
- Pension funds
- Provident funds
- Preservation funds
- Living and life annuities
Under the new system, when applying for a tax directive to withdraw retirement funds, your non-resident status must be verified via this SARS-issued confirmation letter, not just a TCS PIN.
Read more: Dangerous misconceptions about financial and tax emigration from South Africa.
Tax clearance in South Africa – why is SARS making this change?
SARS is strengthening its compliance controls and improving the way it verifies tax residency status. By requiring a more formal and specific confirmation – the Non Resident Tax Status Confirmation Letter – SARS can ensure that only individuals who have truly ceased South African tax residency are eligible for the relevant tax treatment when withdrawing retirement funds.
This move is part of a broader strategy to close compliance gaps, especially in cases where expats may have already left the country without formally completing the tax emigration process.
How to get your Non-Resident Tax Status Confirmation Letter from SARS
Before you can access your retirement funds under the new directive system, you will need to:
- Complete the SARS non-resident declaration form
- Provide supporting documentation (e.g. proof of residence abroad, foreign tax number, and travel/emigration history)
- Submit these documents to SARS
- Receive your SARS confirmation letter formally acknowledging your non-resident tax status
This confirmation letter is now the required documentation when applying for a tax directive to withdraw retirement savings as a non-resident.
Read more: SARS Non-Resident Declaration – how to get confirmation of your tax non-residency.
What if you already live abroad but haven’t completed tax emigration?
Even if you left South Africa years ago, if you haven’t formally ceased your South African tax residency and obtained the relevant SARS confirmation, your profile may still reflect you as a tax resident. This means:
- You could face unnecessary tax deductions
- Your directive application could be delayed or rejected
- You might be considered non-compliant and flagged by SARS
It is now essential for all expats to ensure their tax residency status is properly recorded and confirmed via the updated process.
Read more: South African tax residency rules – expats, are you still tax residents of South Africa?
Potential risks of non-compliance
Failing to comply with the new SARS requirements could result in:
- Inability to access retirement funds
- Incorrect tax treatment (e.g. taxed as a resident)
- SARS audits or retrospective assessments
- Unnecessary delays in retirement fund payouts
SARS is also putting technology and AI to work in monitoring compliance more closely — including historical tax behaviour, overseas income, and undeclared offshore investments.
Read more: The dangers of not completing tax emigration after you leave South Africa.
Tax directives in 2025: a one-step process – but higher scrutiny
Previously, obtaining a tax directive was a two-step process involving the TCS PIN. Now, the application and confirmation are handled within a single-step manual submission, but the scrutiny is greater. This makes it even more important for expats to ensure their tax affairs are in order.
The changes apply across all types of South African retirement funds, and there’s no distinction between product types. Whether it’s a retirement annuity or a preservation fund, the directive process now follows the same rules for non-residents.
South African tax for expats – why a tax diagnostic review is vital
Given the increasing complexity of South African expat tax, it’s highly advisable to undergo a tax diagnostic review. This involves working with a tax specialist to:
- Confirm your current tax residency status
- Review your SARS profile for potential red flags
- Identify any historic compliance gaps
- Ensure supporting documentation is complete and correct
This proactive approach can help you avoid issues before they arise, particularly if you’re planning to withdraw retirement savings shortly.
Read more: Steps to take if your SARS tax compliance status shows as “non-compliant”
FinGlobal: cross-border tax and financial specialists for expats
With SARS stepping up compliance measures, it’s more important than ever for expats to be fully aligned with the latest tax regulations. If you’re unsure whether your tax affairs are up to date – especially if you don’t have a SARS non-resident tax status confirmation letter – now is the time to get it sorted. Whether you’re accessing a retirement annuity, life annuity, or living annuity, make sure you’re using the correct and current process. A small delay now could avoid major complications later.
Need help finding your way through the new SARS tax directive system? We provide expert support for South African expats – from tax emigration, to tax clearance and retirement fund withdrawal.
Get in touch with FinGlobal today to ensure you are SARS expat tax compliant and your documentation is in order. Let’s get your money where you need it to be!
Send us a message
Leave your details below including a short message and a financial consultant will contact you.
Licensed South African Financial Services Provider FSP # 42872
You have Successfully Subscribed!
FinGlobal Newsletter Subscription
Subscribe to the FinGlobal newsletter to receive all the latest news and information regarding our services and South African Expats.