Approximately 12,000 businesses were forced to register for VAT following the non-compliance campaign, 73% of which were from Gauteng.
Thousands of businesses are in the regulatory crosshairs of the South African Revenue Service (SARS) due to their Value Added Tax (VAT) registration status.
Businesses are not complying with SARS' mandatory VAT registration rules in relation to annual revenues exceeding a certain threshold.
This information was revealed in a written reply to a recent parliamentary question directed at the Finance Ministry.
While the Finance Ministry highlighted the compliance data, the preliminary question specifically raised questions on the number of foreign-owned businesses that were complying with tax rules.
The ministry highlighted that neither SARS or the National Treasury kept nationality-specific taxation statistics, with activists insisting that the focus on nationality was stoking xenophobic fires.
Compulsory VAT registration
The ministry's response said SARS was aware of at least 48 773 taxpayers who were running small businesses and spaza shops that met the revenue threshold, but were not VAT registered.
It said 11,988 were identified and forcibly registered during the 2025/26 financial year, collecting an additional R500 million in the process.
Gauteng and the Eastern Cape had the highest numbers of businesses forced to comply in recent months with 8 802 and 1 712 respectively – 87% of new registrations forced.
The ministry said it used information from other government departments, third-party data from banks and service providers, and point-of-sale data to track non-compliance.
SARS also monitored compliance through audits, reviews and field visits to high-risk areas and suburbs.
The new financial year will see new thresholds, with SARS adjusting the mandatory VAT registration threshold from R1 million to R2.3 million from 1 April.
Additionally, with effect from the same date the voluntary VAT registration threshold was increased from R50 000 to R120 00.
“These measures are aimed at broadening the tax base, improving voluntary compliance and ensuring that all eligible businesses, regardless of ownership or nationality, comply with the Republic's tax laws,” the response said.
'Blame the immigrants'
The question was asked by Carol Mafagane of the uMkhonto weSizwe (MK) party, who asked if the ministry could verify the number of VAT registered foreign-owned businesses.
MK Party MPs also wanted to know how many spaza shops were foreign-owned, how many compliance inspections were carried out and what was being done to ensure that foreign nationals were tax compliant.
“SARS does not impose different tax registration or compliance requirements based on nationality and SARS does not maintain different VAT registration data based on the nationality of business owners.
The Finance Ministry confirmed, “SARS is unable to provide details on the total number of foreign-owned informal businesses or spaza shops registered for VAT, or by province or municipality.”
Foreign shop owners had to bear the brunt of this Last week's protests in East London Where shops, equipment and vehicles were set on fire, while large groups demanded the identification of suspected illegal immigrants.
The Workers and Socialist Party (Wasp) condemned the obsession with foreign nationals, calling the MK Party, Operation Dudula, March and March followers and others “far-right populist forces”.
Wasp accused political parties and civil organizations targeting foreign nationals of focusing on the symptom rather than the cause of economic conflicts.
“The anger of the working class against the cost of living crisis cannot be directed against the even more deprived working people, but must be directed against the ruling class across Africa.
“Successive governments have imposed austerity and privatisation, deliberately creating shortages which xenophobes have blamed on migrants.
Wasp concluded, “The only effective response is to build a counter-politics based on a socialist program for the working class.”
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