SARS wealth unit considers tracking more millionaires to bolster state tax revenue

Key topics:South Africa may lower high-wealth tax threshold to widen revenue baseHigh-wealth unit handles 4,084 taxpayers with gross assets ≥75M randWealth tax review aims to boost collection without unpopular levies.Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up for the BizNews channel here..By Prinesha Naidoo.South Africa is considering lowering the threshold for its high-wealth tax unit, expanding the number of rich taxpayers it monitors to boost government revenue.Taxpayers with gross assets of at least 75 million rand ($4.3 million) are among the nation’s richest and their affairs are handled by the South African Revenue Service’s High Wealth Individual unit. Their number, which includes founders and chief executives of listed companies, trusts and family offices, more than doubled to 4,084 taxpayers by the end of March 2024 — three years after the establishment of the unit.Still, the figures fall short of private-sector data.A 2024 report by Henley & Partners and New World Wealth estimates South Africa is home to more than 37,400 individuals with liquid investable wealth of at least $1 million, making it the continent’s richest country. A separate study by Knight Frank shows more than 5,000 individuals with a minimum net worth of $10 million live in the nation. “We want to expand our base,” Natasha Singh, the director of the wealth unit, said in an interview. “There are many ways we can do this: one is to bring on board more taxpayers with 75 million rand in gross assets, another is to lower the criteria and potentially move toward the measures used in Africa or global reports on high-net-worth individuals.”Broadening this base and extending existing offerings such as dedicated relationship managers to more wealthy taxpayers could boost revenue collection without resorting to politically unpopular levies in a nation that’s struggled to balance its budget since the global financial crisis.Wealth TaxA dispute within the country’s coalition government over proposed value-added tax hikes forced Finance Minister Enoch Godongwana to draft an unprecedented three budgets earlier this year and scrap the contentious revenue-raising measure to get his spending plan over the line. .Read more: .Stagnant tax thresholds are reducing South Africans disposable income.A review of the criteria is under way and any potential changes may take effect in the short-term, Singh said, declining to speculate on a new possible threshold.The National Treasury required all provisional taxpayers with assets of more than 50 million rand to declare those securities and liabilities at market value in their 2023 tax returns. The disclosure would help determine the levels and structure of wealth holdings, it said at the time. South Africa’s status as one of the most unequal countries in the world has repeatedly fuelled calls for a wealth tax. Introducing such a levy — over and above duties on estate, property, capital gains and donations — could trigger capital flight and erode the personal-income tax base, according to a readout of a session in parliament. About 49 billion rand in annual revenue could be lost if the top 10% of personal-income taxpayers emigrated, it showed.The tax agency’s wealth unit collected 8.7 billion rand in revenue in the year through March 2024, its latest annual report shows. That’s expected to increase as its tax base grows and legislative loopholes are closed. A recent court judgment that clarified the reporting responsibilities linked to executive-pay incentives is also expected to help.“We believe most taxpayers are honest and want to comply, and it’s our role to facilitate this with the highest ease and lowest cost,” Singh said. “Compliant and cooperative taxpayers will face the least intrusion and disruption while those that delay, detract, dismiss and deflect will face the full extent of the law including criminal investigations.”.© 2025 Bloomberg L.P.

SARS wealth unit considers tracking more millionaires to bolster state tax revenue

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