South Africa rules out an annual wealth tax, citing capital flight

South Africa’s Finance Minister Enoch Godongwana has told Parliament the government is not planning an annual net wealth tax, answering a question from the EFF’s Carl Niehaus on 2 July 2026. The reply closes, for now, a debate that has run in South African policy circles for over a decade.

The argument the Treasury made

Godongwana’s case rested on numbers rather than principle. South Africa already taxes wealth through estate duty, donations tax, securities transfer tax and transfer duty on property, plus local property rates. Those four national wealth taxes raised R21.3bn in 2024/25, down from R22bn in 2021/22, which he put at 1.15 per cent of total tax revenue against an OECD average of about 0.5 per cent for comparable taxes. Capital gains tax added a further R16.4bn in 2020/21.

He argued a comprehensive income tax that also taxes capital gains raises more and redistributes better than a tax on the stock of wealth. South Africa’s top marginal income rate is 45 per cent, and the top 13 per cent of taxpayers already pay 60 per cent of personal income tax, per the 2026 Budget.

The line that matters most for a family office audience is the one about mobility. “It is this tax base that will be most at risk of relocating with the introduction of a wealth tax,” Godongwana said. He also noted that of the twelve countries with a wealth tax in 1990, only Norway, Switzerland, Spain and Colombia still have one, most others having dropped it over collection cost, administrative complexity and capital flight.

Why this reaches beyond South Africa

The decision spares a domestic billionaire class that includes Johann Rupert and Patrice Motsepe, according to Billionaires.Africa. But the reasoning is what advisers elsewhere will read.

A finance minister has stated plainly that his most mobile taxpayers would leave if taxed on their net worth, and has used that as grounds not to act. That is the same calculation now shaping policy in the other direction in parts of Europe, where wealth and exit taxes are being tightened, and it feeds directly into the residency planning that family offices do. When one jurisdiction publicly worries about losing its wealthiest residents, it becomes a more attractive base for families weighing where to sit.

For South African families themselves, the near-term picture is steadier. The existing mix of estate duty, donations tax and CGT stays in place, so succession and gifting plans built around those rules hold. The longer view is less settled. South Africa remains one of the world’s most unequal societies, and Godongwana framed this as the current position, not a permanent one. A future budget under fiscal pressure could revisit it.

For now the message is clear enough: the Treasury would rather tax income and capital gains than the wealth behind them, and it has said so on the record.

Sources: BusinessTech, Moneyweb, Billionaires.Africa.