South Africa is chasing millionaires out of the country

With just 2.9% of taxpayers paying nearly a third of South Africa’s personal income tax, experts warned that SARS is driving wealthy people to leave the country.

Tax Consulting SA’s SARS Tax Compliance Specialist, Chrispos Seete, and Expatriate Tax Support Specialist, Asamkele Tyala, said every year around Budget time, attention turns to how South Africa funds its public spending.

“Without question, the narrative resurfaces of a small percentage of taxpayers footing a disproportionate share of personal income tax (PIT),” Seete and Tyala said.

“The 2025 Budget once again confirmed that this concentration remains a defining feature of the country’s tax system.”

According to the National Treasury’s 2025 Budget documents, 12.5% of individual taxpayers earning more than R750,000 per year contribute close to 60% of PIT.

“This equates to approximately 980,000 taxpayers out of the 26 million individuals registered for PIT,” they explained.

It is important to note that not all registered individuals are required to pay income tax, particularly those below the tax threshold.

Even so, the figures highlight the extent to which personal income tax revenue depends on a narrow segment of higher-earning taxpayers.

“The concentration intensifies at the upper end of the income scale. Taxpayers earning R1.5 million or more per year account for 32.7% of PIT payable yet represent only 2.9% of assessed taxpayers.”

Personal income tax remains the largest source of tax revenue, contributing 39.5% of total tax collections in 2024/25, according to the latest Tax Statistics 2025.

Seete and Tyala noted that expanding South Africa’s tax base has been part of the South African Revenue Service (SARS) objectives for the past few years.

SARS’ Strategic Plan 2025/26–2029/30 is clear on how the tax authority positions itself to conquer the “must-win battles”, which include:

• broadening the tax base;
• improving voluntary compliance and fiscal citizenship; and
• using resources intelligently to achieve more with less.

South Africa’s tax base is shrinking

Following Budget 3.0, which was presented in May 2025, SARS confirmed that it will broaden the tax base in the current financial year.

It plans to do so by systematically identifying and registering individuals and businesses that have previously operated outside the formal tax system.

Finance Minister Enoch Godongwana has repeatedly stated the benefits of expanding the tax base and improving SARS’s administrative efficiency.

According to Godongwana, this will allow the government, over time, to spread the tax burden more evenly and equitably. This commitment was reaffirmed in the 2025 Budget documents.

“Government remains committed to broadening the tax base and improving tax administration to support sustainable revenue collection and economic growth,” the Budget stated.

During a visit to the SARS National Command Centre in Brooklyn on 5 February 2026, President Cyril Ramaphosa acknowledged SARS’ efforts and aim to expand the tax base, improving voluntary compliance and fiscal citizenship.

The President stressed that, despite early signs of economic recovery, difficult times persist, affecting tax collection.

“Revenue collection is more challenging, both domestically and globally. Slower economic growth and higher living costs are squeezing the tax base,” he told SARS officials during his visit.

Seete and Tyala explained that high unemployment, particularly among younger South Africans, limits the expansion of the tax base through PAYE, a significant revenue stream for SARS.

“With overall unemployment at 31.9% and youth unemployment at approximately 40%, fewer individuals enter the formal tax net despite being of working age.”

“While the number of registered taxpayers itself is not shrinking, its composition raises important policy considerations.”

Market commentators have long warned of the over-reliance on a relatively small group of wealthy individuals.

This includes ageing taxpayers and mobile high earners who emigrate to pursue a new life abroad, exposing revenue collection to economic volatility and behavioural responses.

The 2025 Tax Statistics bulletin shows that between the 2017 and 2024 tax years, more than 51,500 individuals formally declared that they had ceased to be South African tax residents.

Over the last four years, South Africans aged 18 to 44 made up an average of 61% of taxpayers who left the country and formally severed tax ties with SARS each year.

“SARS noted that this removes a highly productive segment from the country’s tax base every year,” Seete and Tyala said.

The Tax Statistics also show an ageing but compliant segment of the tax base. In 2023, more than 470,000 South African taxpayers with a taxable income of R154 billion were 66 years and older.

By 2024, this figure had increased to 512,346 taxpayers with taxable income of R186 billion, clearly demonstrating a heavy reliance on a large, ageing tax base.

SARS ramps up compliance

“Against this backdrop, SARS has made it clear that protecting the existing tax base is as important as expanding it,” Seete and Tyala said.

The net revenue estimate for the current financial year stands at approximately R2 trillion. SARS has reiterated that its mandate is anchored on revenue collection, compliance enhancement and the facilitation of legitimate trade.

“By dutifully implementing its compliance programme, SARS is well positioned to collect all revenue due to the fiscus,” it stated.

Seete and Tyala explained that the revenue service is not only focused on enforcement within South Africa’s borders.

“A common misconception among expatriates who left South Africa is that physically leaving the country automatically ends their South African tax obligations.”

“Unless a taxpayer has formally ceased South African tax residency – whether permanently or temporarily – SARS continues to regard them as taxable on their worldwide income, regardless of how long they have lived abroad.”

Seete and Tyala stressed the importance of ensuring that SARS has the correct tax residency status on record is critical. This responsibility ultimately rests with the taxpayer.

“As long as SARS’ records reflect an individual as a South African tax resident, that taxpayer remains subject to South African tax on their worldwide income.”

“For South Africans working or living abroad, unresolved residency status can result in unintended tax exposure, penalties, and interest, often many years after departure.”

They warned that these risks are amplified by increased data sharing, the use of artificial intelligence and advanced skills and systems to enhance compliance.

Advice from an expatriate tax specialist is essential when navigating the correct cessation of tax residency.

These experts help ensure compliance with South African tax obligations on locally sourced income, while avoiding unnecessary taxation of foreign earnings.