5 African countries where South Africans can retire and pay less tax

For South Africans approaching retirement, choosing where to live after leaving the workforce is no longer only about beaches, healthcare and the cost of living.

Tax can also play a major role.

Moving to another African country could potentially change how retirement income is taxed, particularly if a South African becomes a non-resident for South African tax purposes and establishes tax residence elsewhere.

However, retiring abroad does not automatically make a South African pension tax-free.

The South African Revenue Service (SARS) says non-residents receiving pensions or annuities from South African sources may still be subject to South African tax, although a Double Taxation Agreement (DTA) between South Africa and the country of residence can affect which country has the right to tax the income.

South Africa has DTAs in force with a number of African countries, including Botswana, Ghana, Mauritius, Namibia and Seychelles.

For South Africans considering retirement abroad, these five destinations are worth investigating.

1. Mauritius: A popular retirement destination

Mauritius is arguably one of the most interesting African retirement destinations for South Africans.

The island allows foreign nationals aged 50 and above to apply for a Retired Non-Citizen Residence Permit.

Mauritius’ government says the permit allows a retired non-citizen to reside in the country, while the current residence framework provides for long-term residence subject to the applicable requirements.

Mauritius also has a Double Taxation Agreement with South Africa, which is important for South Africans receiving retirement income from South African sources.

The attraction is instead the combination of a dedicated retirement residence route, an established financial centre and a tax treaty with South Africa.

For a South African retiree, the precise tax outcome would depend on the pension, tax-residency status and the provisions of the applicable treaty.

2. Botswana: A retirement option close to South Africa

Botswana is particularly attractive to South Africans who want to remain close to home.

The country has a formal residence-permit system for non-citizens, with applicants required to provide documentation including proof of financial support and bank statements.

More importantly from a tax perspective, South Africa and Botswana have a Double Taxation Agreement in force.

Botswana also offers a major lifestyle advantage for South Africans: it is close enough for family visits and remains culturally and economically connected to South Africa.

For someone who wants to retire abroad without moving to another continent, Botswana could therefore be an interesting option.

3. Namibia: A retirement destination next door

Namibia is another obvious option for South Africans looking for a retirement destination close to home.

Its proximity to South Africa means retirees can remain within relatively easy travelling distance of family while enjoying a different tax and residency environment.

South Africa and Namibia have a Double Taxation Agreement, which has been in force since 1999.

Namibia therefore deserves consideration by retirees who want to remain in Southern Africa rather than move to an island destination.

However, prospective retirees should obtain advice on Namibia’s domestic tax rules and their individual pension arrangements before making the move.

4. Seychelles

For retirees prioritising lifestyle, Seychelles offers a very different proposition.

The island nation has a residence-permit system for non-Seychellois.

Its immigration authorities say applicants must provide evidence of their financial status, while holders of a residence permit must meet specific conditions during their stay.

Seychelles also has a Double Taxation Agreement with South Africa, which SARS lists as being in force.

For a retiree with sufficient financial resources, Seychelles could therefore combine an attractive lifestyle with a potentially useful international tax framework.

5. Ghana

Ghana is another African destination worth considering, particularly for South Africans who want a more affordable West African retirement option.

South Africa has a Double Taxation Agreement with Ghana, which entered into force in 2007.

That makes Ghana relevant to South Africans receiving retirement income while living abroad.

Ghana may therefore be worth considering alongside the more established retirement destinations in Southern and Indian Ocean Africa.