“We want to expand our tax base,” said Natasha Singh, the director of the unit within the Ministry of Finance that manages the tax affairs of high-net-worth individuals, in an interview with Bloomberg.
Natasha Singh noted that there are “many ways to do this, one is attracting more taxpayers with 75 million rands (approximately 3.6 million euros) in gross assets, another is reducing the criteria on high-net-worth individuals.”
Taxpayers with a gross income of at least 75 million rands are scrutinized by the High Net Worth Individual Unit of the South African Revenue Service, with more than 4,000 citizens in this category, double the number in 2022 when the unit was established.
Expanding the number of citizens in this category and extending existing offerings, such as dedicated managers for the wealthiest taxpayers, could increase revenue collection without resorting to politically unpopular taxes in this neighboring country of Mozambique, which, according to Bloomberg, has been struggling to balance its budget since the global financial crisis and has recorded small economic growth rates in recent years.
South Africa’s status as one of the most unequal countries in the world has repeatedly fueled calls for the introduction of a wealth tax, but the measure has been hindered by concerns that it could trigger capital flight.
According to a study discussed in the South African parliament earlier this year, approximately 49 billion rands (2.3 billion euros) in annual revenue could be lost if the top 10% of taxpayers with the highest personal income were to emigrate.
“We believe that the majority of taxpayers are honest and want to comply with the rules, and it is our role to facilitate that with maximum simplicity and minimum cost,” said Singh, concluding, “Taxpayers who comply with the rules and cooperate will face the least intrusion and disruption, while those who delay, deflect, reject, and divert will face the full extent of the law, including criminal investigations.”
