South Africa can become a millionaire hotspot

Sygnia CEO Magda Wierzycka said that South Africa could lure international millionaires and give the National Treasury a revenue boost by implementing a flat tax regime. 

Wierzycka told The Money Show that South Africa is doing very well compared to the rest of the world. 

While the UK is facing economic struggles and the US is struggling with uncertainty under President Donald Trump, South Africa is, conversely, entering a stage of stability under the Government of National Unity (GNU).

This is the case despite the fact that the ANC and the DA were unable to reach an agreement on a proposed 2 percentage point VAT increase before the 19 February Budget. 

“South Africa, all of a sudden, looks like a country full of promises,” Wierzycka said. 

“I can see construction everywhere, building cranes everywhere. Things are beginning to appear one, stable, and two, a lot more positive. 

“The things that Trump does on a daily basis are completely unpredictable. You are seeing the volatility in the markets, where frankly, it’s anyone’s bet regarding what he tweets tomorrow.” 

Regarding the possible funding cuts that Trump could impose on South Africa, he has already cut US HIV/Aids funding to South Africa, so there isn’t much more that Trump can cut back on where the country is concerned. 

“There is actually very little more than he can do. So I look at the world, and I actually think that South Africa is a wonderful place to be,” she said. 

On top of improved sentiment, Wierzycka explained that South Africa also has the potential to benefit from a slight tax change, which could help fix its budget shortfall. 

She explained that South Africa’s tax regime is pretty benign compared to countries like the UK, which has one of the highest tax rates in the world.

Wierzycka said that if your tax regime is benign, you can consider your options for increasing tax revenue. 

“Preferably, it’s not taxing the wealthy, and, of course, you can’t tax the poor,” she explained. 

Wierzycka added that, notwithstanding VAT increases, one needs to be much more innovative about generating tax revenue. 

One way that countries in Europe, such as Italy, Greece, and Switzerland, are doing this is by attracting wealthy people by offering a “flat tax regime”.

“So you get taxed on anything you earn in the country, so if you made any money in South Africa, you would get taxed on it, no more rates,” she explained.

Any income you earn overseas, from investments or otherwise, will be taxed at a flat rate.

“Italy has a flat rate of €200,000 (R3.89 million), and Greece has €100,000 (R1.95 million) annual tax for anything you’ve got offshore.” 

“Now, when you look at SA Statistics, how many people in South Africa pay tax equivalent to about R4 million per annum? Very few. I think it’s a few 1,000 people,” she said.

For its 2024 Tax Statistics Report, SARS assessed approximately 88% of individual income tax returns, which equates to around 6.6 million taxpayers.

Of these assessed taxpayers, 341,630 – just 5.2% of those assessed – had a taxable income of over R1 million, contributing R226.4 billion to personal income tax. 

This group contributed 45% of the R500 billion assessed. 

Wierzycka explained that introducing a flat tax regime would be an innovative way for South Africa to attract wealthy foreign taxpayers and bolster the country’s revenue collection. 

She said this would be limited to those coming to South Africa and thus doesn’t include nationals – and would likely be for a limited period of time, like ten years. 

While some European countries are benefitting from similar incentives, others are feeling the effects of charging wealthy individuals excessive taxes. 

Notably, according to the New World Wealth (NWW) analytics firm, Britain lost a net 10,800 millionaires in 2024, more than any other country except China. That is an increase of 157% from 4,200 in 2023. 

“That’s 1 pound millionaire every 45 minutes,” Wierzycka said. 

NWW explained that these millionaires are moving to cities like Amsterdam, Dubai, Geneva, Monaco, Paris, Singapore, and Sydney to avoid Britain’s excessive taxes.