How a small fraction of companies drives South Africa's corporate tax revenue

A small fraction of South African companies continues to shoulder the bulk of the country’s corporate tax burden, a concentration that is sharpening debates around inequality, tax policy and economic risk in Cape Town.

According to the Tax Statistics 2025 – Highlights published by National Treasury and the South African Revenue Service (SARS), just 0.1% of assessed companies accounted for more than two-thirds of company income tax collected nationally in the 2023 tax year.

The same group generated 68.1% of total taxable income and 66.4% of assessed company tax, highlighting how heavily the fiscus depends on a narrow corporate base.

While the figures are national, they carry particular significance for Cape Town, home to a large share of South Africa’s major corporates, regional head offices and financial services firms. These sectors, including finance, insurance, real estate and professional services, are identified in the tax data as key drivers of company income tax.

Company income tax contributed R323.2 billion to the national fiscus in the 2024/25 financial year, accounting for 17.4% of total tax revenue. At the same time, the data shows that the overwhelming majority of registered companies contribute relatively little to overall collections, despite operating in the same difficult economic environment marked by weak growth, high costs and constrained consumer demand

The concentration of corporate tax revenue mirrors broader economic patterns in Cape Town, where strong commercial activity and high-value property markets coexist with persistent unemployment, housing shortages and rising service-delivery pressures.

The issue has featured prominently in recent public debate. The Cape Argus has reported on political calls for alternative tax mechanisms aimed at addressing inequality, including proposals to tax wealth rather than raise consumption taxes such as VAT. The newspaper has also covered mounting pressure on households from fuel levies, with concerns that consumption-based taxes disproportionately affect lower-income residents:

At a national level, budget discussions have increasingly focused on the risks of a narrow tax base, with calls for greater transparency and inclusivity in fiscal planning as government weighs how best to fund public services without deepening inequality: The latest tax data also provides context for SARS’s widening enforcement efforts, which have expanded beyond traditional salaried earners to include smaller businesses and new sectors of the economy, a shift previously reported by the Cape Argus: Despite these efforts, the statistics show that enforcement alone has yet to materially alter the underlying concentration of corporate tax contributions, leaving the revenue system heavily reliant on a small pool of large firms.

For Cape Town, where finance and business services remain central to the local economy, the figures underline a familiar tension: strong revenue generation at the top of the economy alongside deep structural inequality across the city.

As policymakers grapple with how to grow the economy, create jobs and stabilise public finances, the data points to a central challenge — expanding the tax base through inclusive growth, rather than increasing reliance on a small group of companies that already carry most of the burden.

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Cape Argus