Expat tax South Africa: what has changed in 2026 for South Africans working abroad

If you’re a South African tax resident working overseas, SARS counts your foreign salary as part of your worldwide income and taxes your worldwide income.

Let’s look at important tax regulations that you should be aware of.

South African expat tax: the R1.25 million exemption did not move

South African tax residents who work abroad can exempt qualifying foreign employment income from South African tax, up to R1.25 million a year.

It was included in the 2026 budget and has remained at R1.25 million since March 2020.

If the amount you earn abroad exceeds that limit, the amount by which it exceeds the limit will be taxed in South Africa at the standard rates.

Expat tax exemption in South Africa: You have to qualify under the 183 day rule

The exemption does not happen automatically; four conditions must be met:

1. You must be an employee; contractors, consultants, and freelancers are excluded from this category. If you send invoices to foreign clients rather than earning a foreign salary, you are not considered to be an employee.
2. You have to have been outside South Africa for more than 183 full days during a period of 12 months.
3. You need a continuous period of over 60 full days away from the country at some point during that time.
4. The work must have been carried out outside South Africa.

Make sure to keep a record of your actual travel dates, since you’ll need to know your position if there is any difficulty in counting the days.

And finally, you should continue to report the income to SARS even in those years when the exemption applies to the entire amount.

If you have already paid tax abroad on income which is subject to taxation in South Africa, you might be able to claim a credit for the foreign tax you have paid; however, this credit is limited to the amount of South African tax that would have been payable on that same income and so it simply reduces your total tax liability rather than eliminating it.

Budget 2026 gave a little back on the excess on foreign employment income

Treasury delivered the Budget on 25 February 2026 and adjusted the income tax brackets and rebates for inflation from 1 March 2026. That came after two budgets with no inflation relief at all. The brackets moved up by roughly 3.4%.

Therefore, when your foreign salary exceeds R1.25 million, any amount above this figure is taxed using slightly more favourable rates.

Read more: South Africa budget speech 2026: What the latest tax changes mean for South African expats

You can put more into a retirement annuity

The annual limit for retirement fund contributions increased to the lower of R430 000 or 27.5% from 1 March 2026. Previously, it was R350 000 and had remained at that level since 2016.

If, as a tax resident, you are still paying into a South African retirement annuity, you now have more room to bring your taxable income down.

Your offshore transfer allowance doubled

The single discretionary allowance was increased by the Reserve Bank to R2 million each calendar year for people who are 18 years of age or over. This allowance may be used for travel, gifts, investments abroad and general transfers. When making use of the allowance, you normally do not need to obtain a tax clearance PIN from SARS. Instead, you will usually only have to provide your ID, your banking details and the purpose of the transfer.

The rules remain as they have always been.

Foreign pensions are safe, for now

The draft tax legislation that was published in 2025 suggested removing the exemption relating to foreign pensions, annuities and lump sums earned from previous work carried out abroad, the change being to come into effect in March 2026; however, following a vigorous public reaction, the Treasury withdrew the proposal in November 2025.

The exemption remains, and Budget 2026 included no alteration of it.

The Treasury has stated that its concerns are still there and that it would like to have another consultation. Therefore, if you have built up a pension abroad with the intention of drawing from it later, you should keep an eye on the next set of tax bills.

SARS is going back over some non-resident approvals

This is something that applies to those who have already completed the cessation process. Tax professionals are saying that some individuals who have a SARS Notice of Non-Resident Tax Status have been sent letters concerning a review, and possibly the withdrawal, of that status. In certain cases, this has happened more than a year after SARS had confirmed it, or after the person had returned to live in the country.

This is in line with the direction that SARS has been going; following the 2026 Budget, the authority cited compliance revenue growing at a compound annual rate of 18.8% over six years.

The lesson is simple: the grounds on which you discontinued your tax residency in South Africa and the documents supporting those grounds must still be valid years later.

Dates for this filing season

The filing season began on 1 July 2026, with auto-assessments being sent out between 1 and 12 July. If you did not receive an auto-assessment and are a non-provisional taxpayer, your deadline is 23 October 2026. Provisional taxpayers have until 22 January 2027. Penalties for filing late amount to between R250 and R16 000 per month according to your taxable earnings from the previous year, and these penalties can continue for up to 35 months.

Read more: Navigating SARS’ new tax filing requirements: What South Africans expats need to know in 2026 

A short checklist

• Confirm your residency status instead of assuming it.
• Add up your foreign earnings in rand, bonuses and allowances and benefits included, and see where you land against R1.25 million.
• Find out whether SARS regards you as an employee or as a contractor
• Track the days using actual dates.
• File every year, even when the exemption covers everything.
• Make sure that you have the supporting documents when you have a Notice of Non-Resident Tax Status.

Frequently asked questions

1. What is section 10(1)(o)(ii)?
   The section of the Income Tax Act which provides the exemption for foreign employment income is what allows a South African tax resident who is working abroad to avoid paying South African tax on up to R1.25 million of their foreign salary each year. The section is sometimes referred to as s10(1)(o)(ii) and is generally known simply as the expat tax exemption.
2. Has the section 10(1)(o)(ii) exemption changed in 2026?
   The R1.25 million limit established by Budget 2026 remains exactly as it was. This cap came into effect on 1 March 2020 and has not been amended since.
3. Does the exemption apply if I’m freelancing or contracting overseas?
   No. It only covers people in an employment relationship. Independent contractors, consultants and self-employed people fall outside it, even if they’re doing all their work abroad and meet the day tests.
4. How many days do I need to be out of the country?
   More than 183 full days outside South Africa in a 12-month period, and inside that period, a continuous stretch of more than 60 full days outside the country. Both have to be true.
5. What happens to the income above R1.25 million?
   It’s taxed in South Africa at the normal rates for that year. If you’ve already paid tax on it in the country where you work, you may be able to claim a foreign tax credit under section 6quat, capped at the South African tax payable on that income.
6. Are my foreign pension and annuity payments still exempt?
   Yes. Draft legislation in 2025 proposed removing the exemption in section 10(1)(gC)(ii), which covers foreign pensions, annuities, and lump sums for past work abroad. Treasury withdrew the proposal in November 2025, and Budget 2026 proposed no change to it. Treasury has said it still has concerns and wants further consultation, so it may return in a future round of tax bills.
7. Do I still have to file a return if the exemption covers everything I earn?
   Yes. The exemption reduces what you’re taxed on. It doesn’t remove the obligation to declare the income or to file.

Not sure where you stand with SARS and South African expat tax?

Expat tax rules can be complex, especially when you’re earning abroad, managing retirement savings, or dealing with South African tax residency issues. FinGlobal’s experienced team can help you understand your obligations, assess your residency status, and ensure your tax affairs are handled correctly.

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Article written by Hano Vermaak, Expat financial specialist at FinGlobal.