South Africa loses billions in tax revenue as 38,000 super-rich people relocate

South Africa has reported a significant loss in tax revenue as thousands of its super-rich taxpayers changed their residential status. The revenue loss that South Africa has reported amounts to R3 billion (approximately $160 million) as around 38,000 wealthy taxpayers ended their tax residency in the country in 2024.

BusinessTech SA reports that these individuals declared their non-resident status, which has had a significant impact on South African Revenue Service’s (SARS) ability to collect revenue, exacerbating the country’s fiscal challenges.

Data from the 2024 annual tax statistics reveal that the individuals, having declared their non-residency status, have contributed to a decline in SARS’s tax collections. A detailed analysis of their taxable income and tax liabilities over the past decade reveals the deep financial loss resulting from this migration trend.

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Despite an apparent decline in the number of South Africans leaving the country in 2024 compared to the previous year, the trend of wealthy individuals relocating continues to place a strain on South Africa’s tax base.

According to the Organization for Economic Co-operation and Development (OECD), South Africa’s tax-to-GDP (gross domestic product) ratio stood at 27.1 per cent in 2022, significantly higher than the average of 16 per cent for 36 African countries.

This figure is 11.1 percentage points above the regional average, which rose from 14.9 per cent in 2013 to 16 per cent in 2022. Over the same period, South Africa’s ratio increased from 24.8 per cent to 27.1 per cent, marking its highest tax-to-GDP ratio since 2000.

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South Africa’s reliance on personal income, corporate income, and value-added taxes for revenue underscores the considerable fiscal impact of these relocations. The country faces growing challenges in maintaining tax collection levels amid the flight of the super-rich people.