Edward Kieswetter kisses R800 billion goodbye

South Africa faces a massive tax gap, with an estimated R800 billion lost annually due to tax evasion, according to South African Revenue Service (SARS) Commissioner Edward Kieswetter.
This uncollected revenue represents a substantial potential boost to the country’s strained budget, which has grappled with mounting public sector needs and underfunded infrastructure projects.
In recent comments to Parliament’s finance committee, Kieswetter outlined this figure, citing a tax account reconciliation completed at the end of March 2024.
He explained that the R800 billion loss stems from unpaid tax debts, overdue tax returns, and uncollected tax inventory, highlighting widespread tax non-compliance across South African businesses and individuals.
Kieswetter emphasised the significant impact that collecting even a portion of this unpaid revenue could have on South Africa’s finances.
With the country’s estimated tax liability at R2.54 trillion, of which around R1.48 trillion was paid voluntarily and on time, SARS is working with just over half of the funds theoretically owed to it.
This gap accounts for nearly 32% of potential tax revenue, suggesting that nearly a third of due taxes go unpaid each year.
Kieswetter has pointed to SARS’s limited budget as a key factor preventing the agency from fully addressing these shortfalls.
According to him, resource constraints have weakened SARS’s ability to pursue complex cases of tax evasion, which has led to the uncollected tax burden growing further.
In response to this startling estimate, Kyle Mandy, PwC’s tax policy leader, has expressed scepticism.
He noted that the R800 billion figure is much higher than other estimates, including his own earlier calculation of around R300 billion.
Mandy questioned whether SARS conducted a comprehensive tax gap analysis to reach its figure and suggested that the estimate might require further examination to confirm its accuracy.
Regardless of the exact amount, however, both SARS and independent tax experts agree that the uncollected tax is large enough to significantly impact South Africa’s budget if recovered.
South Africa’s constrained budget could benefit enormously from improved tax collection, as additional revenue would allow the government to invest in essential services, bolster social programs, and fund infrastructure projects.
Currently, the government faces challenges in supporting healthcare, education, housing, and energy development—all areas that could see substantial improvements if more revenue were available.
Reducing the tax gap would also ease pressure on the National Treasury, which has had to seek alternative financing to cover budget shortfalls.
Expanding the tax base could spread the fiscal load more evenly, potentially alleviating the need for higher taxes on already burdened compliant taxpayers.
In 2024, SARS adopted a more aggressive stance to improve tax compliance.
The agency has implemented stricter monitoring systems, enhanced cross-agency data sharing, and introduced more robust enforcement measures.
With these tools, SARS aims to identify and penalise non-compliant individuals and businesses more effectively.
The agency has also ramped up its audit capacity, focusing on sectors where tax evasion has historically been more prevalent.
Additionally, SARS has launched public awareness campaigns, urging taxpayers to fulfil their obligations to avoid penalties.
These initiatives are intended to recover unpaid taxes and foster a culture of compliance among South Africans.
Ultimately, closing the tax gap could be transformative for South Africa, providing much-needed fiscal room to address key national priorities.
Read: SARS pulls the trigger on taxpayers – watch out for this notice