Online Reporter
South Africa is weighing plans to lower the entry threshold for its high-wealth tax unit. This move would expand oversight of the country’s richest citizens as the government seeks new ways to strengthen revenue collection.
South Africa plans to reduce the asset threshold requirement for its High Wealth Individual (HWI) tax unit.
Currently, individuals with assets exceeding 75 million rand are monitored under this programme. This initiative aims to increase government tax revenue by widening the monitored taxpayer base. Adjustments in criteria could include implementing tailored services and relationship management for high-wealth taxpayers.
South Africa is weighing plans to lower the entry threshold for its high-wealth tax unit. This move would expand oversight of the country’s richest citizens as the government seeks new ways to strengthen revenue collection.
The South African Revenue Service (SARS) currently monitors taxpayers with gross assets of at least 75 million rand (US$4,3 million) through its High Wealth Individual (HWI) unit, according to a Bloomberg report.
The group, which includes founders of listed firms, executives, trusts, and family offices, more than doubled to 4,084 taxpayers by March 2024, three years after the unit was launched.
That number, however, remains well below private-sector estimates. Henley & Partners and New World Wealth calculate that South Africa is home to more than 37 400 individuals with liquid investable wealth of at least US$1 million, while Knight Frank estimates over 5 000 residents hold net worth exceeding US$10 million.
Officials say broadening the base of the HWI unit and extending tailored services such as dedicated relationship managers could help boost tax receipts without resorting to controversial new levies.
The government has struggled to balance its books since the global financial crisis, with fiscal tensions intensifying this year after coalition disputes forced Finance Minister Enoch Godongwana to rework his budget three times and abandon a proposed value-added tax hike. — Business Insider Africa
A review of the current criteria is underway, with potential changes expected in the short term, according to SARS Commissioner Edward Kieswetter’s office.
The Treasury has already required provisional taxpayers with assets above 50 million rand to declare their securities and liabilities at market value in their 2023 returns, a step designed to better map wealth distribution.
Calls for a dedicated wealth tax have grown amid South Africa’s status as one of the world’s most unequal societies. But officials caution that such a levy could backfire, triggering capital flight and shrinking the personal income tax base.
Parliamentary data suggests the emigration of the top 10 percent of taxpayers could cost the state as much as 49 billion rand in annual revenue.
