- The South African tax base is experiencing depletion due to the mass emigration of taxpayers
A report from the South Africa Revenue Service, SARS is showing that South Africa lost over 6,000 taxpayers in 2022 alone due to emigration to other countries.
SARS have also come out to say as significant as the figures are, it is little or no need for worry or panic as these over 6,000 people falls among the low-income earner, posing little threat to the tax administration.
The government agency also states that beyond the revenue loss this exodus has brought, it has reduced taxpayers’ confidence in the tax administration of the country.
South Africa Lost Over 6,000 Taxpayers: A Perspective on the Impact
The Commissioner of SARS, Edward Kieswetter in a recent public statement, reflected on the aftermath of this exodus that has continued to increase the levels of non-compliance, especially from those left in the country.
His statement to buttress this is below:
“In South Africa the bad news is the good news. We have so much corruption, so much theft; we have so many levels of non-compliance, that if we just focused on addressing the opportunity landscape, we have so many low-hanging fruits for improved revenue collection,”
Other Shades of the Development
Approaching the exodus from another point of view, SARS had revealed that on the flip side, the administration had witnessed some growth in compliance that has generally improved tax collection, especially from Personal Income Tax.
From another perspective, because of the need to offset losses from capital flight, the tax burdens on the remaining taxpayers in the country can be overbearing.
Regardless of the increased burden, it is important to state that SARS and the National Treasury for years now have had a core mandate to improve the tax administration’s competence with a foresight to improve the collection of due taxes.
Key Drivers for SARS’ Collection
In recent times, SARS has decided to go after wealthy individuals in the country, ensuring that they improve compliance within this high-earning group.
The catch for SARS to fall within this group is to earn more than R50 million per anum
Targeting the wealthy
One of the measures put in place by SARS to increase compliance and revenues is the perceived targeting of wealthy individuals in the country.
On top of talk from politicians around a ‘wealth tax’, SARS itself has set up a specialised high-net-worth unit to focus on top earners with assets totalling more than R50 million. This group is projected to represent 5% of the population.
Wealthy South Africans are handled by a special unit in SARS labelled ‘SARS’ HNWI for effective collection. They also help to check the source of wealth.
Strategies of SARS
Certain strategies are involved in the collection duty performed by SARS. Below is a rundown of some of the strategies adopted to grow revenue collection:
- Through risk profiling, SARS selects around 10% of cases for further audits.
- For typical taxpayers, about 92% of tax returns aren’t touched and are handled by automated processes, he said. Of the remaining 8%, which draw alerts for further scrutiny, 70% will be reviewed, and 30% will require further action by SARS.
- SARS also don’t apply subjectivity to its tax processes – in other words, it isn’t going after anyone in particular.
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