There is a proposal to tax foreign pensions accruing to South African tax residents where the services rendered in respect of these pensions were rendered off-shore. At present, these pensions are not taxable in South Africa on the basis that South Africa never granted a tax deduction in respect of contributions to these schemes. It is unclear when this will take effect and what relief will be provided, if any. In certain circumstances, the various double taxation agreements entered into by South Africa do not provide that taxation rights to South Africa.

There are plans to expand South Africa’s double tax treaty network and renegotiate some existing treaties to strengthen economic and trade relations, prevent double taxation and tax abuse, and enhance regional cooperation.

The Budget is expected to face a tough passage through Parliament and it is doubtful whether the VAT increase will obtain the approval required.