South Africa Budget 2026 – Key takeaways for International Wealth Structuring

South Africa’s 2026 Budget, delivered by Finance Minister Enoch Godongwana on 25 February, signals a period of relative fiscal stability after several years of pressure on public finances, writes Ralph Wichtmann, Managing Director of Sovereign Trust (SA).

Government debt is expected to peak and gradually decline as fiscal consolidation gains traction, while economic growth is forecast to improve moderately over the next few years.

This shift was best illustrated last November, when South Africa secured its first credit rating upgrade in nearly 20 years after S&P Global raised the country’s foreign-currency long-term sovereign rating from ‘BB-‘ to ‘BB’. It cited stronger growth prospects, an improving fiscal outlook and reduced contingent liabilities following better performance at state power utility Eskom.

The other really positive news is that South Africa was officially removed from the Financial Action Task Force (FATF) ‘grey list’ of jurisdictions under increased monitoring last October. The removal recognised South Africa’s progress in strengthening its anti-money laundering and counter-terrorism financing (AML/CFT) frameworks to address the 22 deficiencies identified by the FATF in February 2023.

South Africa is widely regarded as being one of the most significant financial hubs on the African continent. With that comes the expectation that it should meet international standards of governance, oversight and transparency in respect of financial matters.

South African Budget

For South African tax residents with international assets or those considering externalising capital, the Budget did not introduce sweeping new tax measures. However, several updates and policy signals remain highly relevant for offshore structuring, wealth planning and estate strategies. Below are the key implications for clients:

1. No major tax increases – but continued reliance on a narrow tax base

One of the most notable developments is that the previously proposed ZAR20 billion tax increase was withdrawn due to stronger-than-expected revenue collections. At the same time, the National Treasury highlighted the structural reality that a relatively small group of high-income taxpayers contributes a significant portion of South Africa’s tax revenue.

For internationally mobile individuals and families with global wealth, this reinforces a long-standing planning consideration:

• South African tax residents remain taxed on worldwide income and gains.
• Effective international tax planning and asset structuring remains essential.

2. Tax incentives to encourage Investment and Savings

The Budget introduced several measures to encourage domestic investment and savings, including increasing the annual limit for tax-free investment accounts from ZAR36,000 to ZAR46,000 and retirement fund deduction limits were also increased to ZAR430,000 annually.

The Capital Gains Tax (CGT) annual exclusion for individuals is to increase from ZAR40,000 to ZAR50,000 and the CGT exclusion in respect of the disposal of a primary residence is also to increase from ZAR2 million to ZAR3 million. The threshold for exemption from Donations Tax applicable to individuals, will increase from R100 000 to R150 000.

While these measures primarily support domestic savings, they highlight a broader government objective; strengthening South Africa’s investment culture. For high-net-worth families, this reinforces the importance of balancing:

• Onshore tax-efficient vehicles (retirement funds and tax-free investments), and
• Offshore investment structures for diversification and currency risk management.

3. Implications for South Africans with International Income

The Budget reiterates the central importance of tax residency in determining tax obligations.

• South African tax residents are taxed on worldwide income.
• Non-residents are taxed only on South African-sourced income and assets.

For individuals living abroad or planning to emigrate, this distinction remains one of the most important planning considerations. Key areas that requiring careful planning include:

• Timing of tax residency cessation.
• Exit Tax implications of becoming non-resident.
• Structuring foreign income streams through appropriate entities.
• Ensuring compliance with exchange control and tax reporting obligations.

4. Estate Planning and Trust Structures

South African trusts continue to play a central role in wealth planning but remain subject to a relatively high tax rate of 45%. This reinforces the need for careful structuring when trusts are used in cross-border estate planning. Key considerations include:

• Whether a South African trust or offshore trust is more appropriate.
• The role of foreign beneficiary structures.
• The interaction between CGT, Donations Tax and Estate Duty
• Whether assets should be held through offshore companies that are owned by trusts.

International families should also consider the impact of:

• Controlled Foreign Company (CFC) rules.
• Anti-avoidance provisions.
• Tax reporting obligations.

5. Exchange Control and Capital Externalisation

One of the major Budget changes introduced in relation to exchange control rules is the increase in the Single Discretionary Allowance from ZAR1 million per calendar year to ZAR2 million with no tax clearance needed. It should be noted, however, that the Foreign Investment Allowance, which requires SARS Approval for International Transfer (AIT) tax clearance, remains unchanged at ZAR10 million per year. These allowances remain the primary mechanisms for legally externalising capital.

For wealthy families, capital externalisation strategies typically involve:

• Phased transfers of investment capital offshore.
• Offshore trusts or Family Investment Companies (FICs).
• Diversification of custody, banking and asset management.

6. Increased focus on Financial Transparency and Compliance

South Africa’s removal from the FATF grey list was a key milestone and the government has indicated that continued strengthening of AML/CFT frameworks remains a priority. South Africa’s next FATF mutual evaluation is scheduled to begin in the first half of 2026, with the assessment concluding in October 2027. This Fifth Round evaluation will be assessing the sustainability of South Africa’s reforms. For globally mobile families, this is likely to involve:

• Increased reporting obligations.
• Greater scrutiny of cross-border transactions.
• Continued emphasis on increased tax transparency.

The Common Reporting Standard (CRS) was first published by the OECD in 2014 as the global standard for automatic exchange of financial account information. It was designed to promote tax transparency and help tackle offshore tax evasion. Over 100 jurisdictions worldwide have implemented the CRS and most of those have now been exchanging information since 2018.

This year, global tax transparency has been fundamentally expanded by bringing crypto assets, digital money and enhanced due diligence into automatic exchange regimes under the new CRS 2.0 and the Crypto-Asset Reporting Framework. From 2026, financial institutions and crypto service providers must report broader asset classes, transaction-level data and additional client identifiers, closing long-standing reporting gaps and significantly increasing cross-border tax visibility.

This expansion makes compliant structuring more important than ever. For internationally active South African families, the focus therefore remains clear – robust global structuring combined with long-term flexibility.