Millionaires dumping South Africa 

Rich South Africans have been steadily leaving the country to live elsewhere as the stagnant economy, lack of service delivery, and high tax burden make living in the country increasingly less attractive. 

This has a significant impact on the local economy through reduced tax income to fund government operations and lost economic activity through production and consumption from individuals who have left South Africa. 

In SARS’ 2024 Tax Statistics, the revenue service revealed that 38,000 South Africans have ended their tax residency, which is estimated to have resulted in R3 billion in lost tax revenue. 

However, the real loss to the country and the taxman is likely to be far higher as, in most cases, all future economic activity is lost from an individual emigrating. 

Fitsource Money executive director Redge Nkosi also explained that many of the people leaving are extremely wealthy and valuable to the local economy. 

“This trend has been clear for a while, where South Africans have been migrating outside of the country. It is clear that it is more migration than temporarily taking up residency elsewhere for tax purposes,” Nkosi told Newzroom Afrika.  

It should be noted that tax residency is not the same as nationality, permanent residence, or citizenship, so it does not accurately reflect raw migration numbers.

In 2023 alone, 1,700 millionaires left the country, representing R5 billion in taxable income and almost R2 billion in assessed tax. 

“You are looking at people who earn no less than R500,000 as they have to be able to move internationally and most likely have assets worth over R1 million,” Nkosi said.

He explained that the figure of R500,000 for annual earnings is relatively conservative, with data pointing to the vast majority of those who end their tax residency having an annual income of over R1 million.

“You are talking about people whose production and consumption are extremely valuable for economic growth in South Africa,” he said.

“These are likely to be people who are 35 years and older, who are highly educated and earn more than R1 million a year.” 

Nkosi explained that many of these individuals leave South Africa to pick up jobs elsewhere and warned that the consequences can be severe. 

SARS’ 2024 Tax Statistics reveals just how significant the problem of wealthy South Africans ending their tax residence has become. 

SARS previously noted that ceasing to be a South African tax resident and similar changes to the status of individuals can imply permanent erosion or changes in the tax base.

However, even a person who ceased to be a South African tax resident is still taxed on their South African-sourced income, SARS said.

For the 2014 tax year, 44,693 taxpayers declared a taxable income of R21.6 billion, of which the tax collectable was R6.2 billion.

For the 2023 tax year, this number of assessed taxpayers decreased to 37,584, or by 15.9%. Taxable income decreased to R9.9 billion, and tax payable decreased by 49.3% to R3.2 billion.

SARS noted that these decreases in the value of taxable income and tax paid were realised mainly by those in the bracket above R150,000 taxable income, largely males between 35 and 44 years old.

Overall, the number of South Africans ending their tax residency seems to be declining, which may indicate that fewer individuals are considering leaving the country. 

However, it is just as likely that this decline is due to many wealthy individuals having already ended their tax residency, meaning there are fewer left to cut ties.

Another explanation may be shifting demographics and a stagnant economy, which result in fewer individuals being in high-income tax brackets. 

This means that individuals may not necessarily be leaving South Africa but simply falling into lower tax brackets. 

Again, the data does not bear this out, as younger and more middle-class taxpayers are now also opting to cut ties with SARS. 

All income brackets besides the lowest three saw a decline in the number of taxpayers within them. 

The number of taxpayers with taxable income of zero or less who ended their tax residency skyrocketed by 575.9% – from 1,814 individuals in 2014 to 12,260 in 2023.

This is shown in the table below, courtesy of SARS.