Cape Town – The Congress of SA Trade Unions (Cosatu) has urged the South African government to focus on tackling tax evasion by wealthy individuals and companies instead of raising VAT.
According to The Citizen, Cosatu spokesperson Matthew Parks called for increased resources for the SA Revenue Service (Sars) to improve tax compliance and crack down on customs fraud, illicit trade, and online gambling.
“This should include targeting tax evasion by high-wealth individuals and companies, customs fraud, illicit trade in alcohol and tobacco-related products and online gambling,” the report quoted him as saying.
African Insider reported in March that SARS commissioner Edward Kieswetter revealed that approximately 100,000 individuals in the country earned over R1 million but evaded tax by not being registered, costing the fiscus around R100 billion in potential revenue.
According to IOL, speaking at a News24, Kieswetter highlighted the need to track these individuals to boost tax collection.
“There are probably at least 100,000 individuals who are in South Africa at the moment, earn more than R1 million, but are not on our register. Imagine if we could find them. You add another R100 billion onto your tax bill,” Kieswetter was quoted as saying.
Alarming
Experts suggest SARS likely identified tax evaders by monitoring spending patterns, Daily Investor reported.
Jashwin Baijoo from Tax Consulting SA revealed that 156,000 taxpayers were either unregistered or had defaulted on their tax filings.
This was especially alarming given that just 1.6 million South Africans were responsible for most of the country’s tax revenue, while close to 30 million relied on social grants for support.
SARS is set to receive R7.5 billion over the next three years to enhance tax collection, with R3.5 billion allocated for 2025/26 and an additional R4 billion over the medium term.
This funding will be used to pursue outstanding tax debt, modernise technology, and combat illicit financial activities through data science, machine learning, and AI.
Kieswetter estimated that South Africa loses R800 billion due to uncollected revenue, with 40%-45% attributed to outstanding tax debts and unfiled returns, and the remaining 55% linked to illicit financial flows and tax crimes.
He emphasised the importance of modernising SARS systems to tackle these challenges.
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Compiled by Betha Madhomu
