Unregistered Millionaires Spark Concerns In South Africa's Tax System

As the South African government works to improve its tax system, a startling revelation has come to light: around 100 000 individuals earning over R1 million annually are not registered for tax.

This estimate, shared by SARS Commissioner Edward Kieswetter, has raised concerns about the growing number of affluent South Africans avoiding their tax obligations.

Finance Minister Enoch Godongwana 's 12 March budget speech outlined plans to allocate R7.5 billion to SARS, aiming to enhance its operations and tackle tax compliance issues. Although SARS has not disclosed the exact methodology behind the 100 000 estimate, experts speculate that it could be based on tracking the spending habits of high-income earners in the country.

Jashwin Baijoo, an Associate Director at Tax Consulting SA, revealed that SARS has identified over 156 000 individuals who, despite engaging in significant economic activities, are either not registered or have failed to file tax returns. This is a serious issue, as a small percentage of South Africans shoulder the majority of the countrys tax burden.

The Daily Investor has reported that in the 2023/24 fiscal year, personal income tax PIT accounted for a substantial portion of the country's R2.2 trillion in gross tax revenue. However, just 1.6 million people-2.6 of the population-are responsible for paying 76.2 of this tax. Meanwhile, around 30 million South Africans rely on social grants, highlighting the imbalance in the country's financial system.