South Africa is facing a massive tax shortfall as approximately 100,000 high-income individuals earning over R1 million annually remain unregistered with the South African Revenue Service (SARS). This tax evasion is costing the country around R100 billion in potential revenue, SARS Commissioner Edward Kieswetter revealed.
Speaking at a News24 post-Budget event, Kieswetter underscored the urgency of tracking down these individuals to enhance tax collection.
“There are probably at least 100,000 individuals who are in South Africa at the moment, earn more than R1 million, but are not on our register. Imagine if we could find them. You add another R100 billion onto your tax bill,” Kieswetter stated.
How SARS Identifies Tax Evaders
Experts believe that SARS is monitoring spending patterns to detect unregistered taxpayers. According to Jashwin Baijoo from Tax Consulting SA, about 156,000 taxpayers are either unregistered or have defaulted on their tax filings.
This tax evasion is particularly alarming, as only 1.6 million taxpayers contribute the majority of the nation’s tax revenue, while nearly 30 million South Africans depend on social grants.
Government’s Plan to Strengthen Tax Collection
To combat tax evasion and enhance tax collection efficiency, SARS will receive R7.5 billion over the next three years. The funding allocation includes:
- R3.5 billion for the 2025/26 financial year
- An additional R4 billion over the medium term
This budget will support efforts to recover outstanding tax debt, upgrade SARS technology, and combat illicit financial activities. The agency plans to leverage data science, machine learning, and artificial intelligence (AI) to improve tax compliance.
The True Cost of Unpaid Taxes
Kieswetter estimated that South Africa loses a staggering R800 billion due to uncollected revenue. The breakdown of this loss includes:
- 40%-45% from unpaid taxes and unfiled returns
- 55% from illicit financial flows and tax-related crimes
Modernizing SARS for a Stronger Economy
To close the tax gap, Kieswetter emphasized the importance of modernizing SARS systems. With improved technology and enforcement strategies, the agency aims to track down tax evaders and ensure compliance.
As the country battles economic challenges, strengthening tax collection remains a priority for the government. With SARS ramping up its efforts, unregistered millionaires may soon find themselves under the agency’s radar.
