Sars Battles South Africa’s Illicit Trade Crisis: Billions Lost, Fight Intensifies

For many South Africans, the devastating impact of illicit trade isn’t just a number on a government report, it’s a threat to schools, roads, and vital public services that rely on tax revenue. But behind the scenes, the South African Revenue Service (Sars) is in a relentless fight to stem the tide of illegal trade that drains billions from the nation’s coffers every year.

The Hidden Cost of Illicit Trade

It’s hard to overstate just how much South Africa loses to illicit trade and tax evasion. Back in 2020, Business Leadership South Africa estimated that the country was losing around R250 million every day because of these illegal activities. The Organisation for Economic Cooperation and Development (OECD) paints an even grimmer picture, suggesting that South Africa’s illicit financial flows siphon off between $3.5 billion and $5 billion annually (that’s roughly R62 billion to R89 billion).

To put that in perspective, this loss amounts to more than 1% of the country’s GDP, money that could have been invested in housing, education, and healthcare.

One of the most glaring examples is the illicit cigarette trade. Cheap, counterfeit cigarettes flood the market, some selling for as little as R5 a pack. This alone robs the fiscus of about R28 billion a year, or around R100 million every working day.

Sars Fighting Back

Despite the scale of the challenge, Sars is not sitting idle. Last year, the revenue authority declared a tough stance against tax crime, warning that criminals are firmly in their sights.

A landmark victory came earlier this year when the Durban High Court confirmed a preservation order against entities linked to Amalgamated Tobacco Manufacturing. The case revolves around a coordinated scheme of tax evasion involving suspicious financial transfers worth over R96 million.

The court’s order allows Sars to safeguard assets while it continues investigating, a move hailed by watchdog group Tax Justice SA as a major win in the ongoing battle against the illicit tobacco trade.

“This case highlights exactly why Sars needs strong investigative powers,” said Yusuf Abramjee, founder of Tax Justice SA. “It confirms what we’ve long suspected, the tobacco industry is rife with tax dodgers bleeding the country dry.”

Why It Matters to You

Every packet of illicit cigarettes is a missed opportunity for public investment. Roads remain potholed, schools lack resources, and hospitals struggle, all because tax revenue is being lost to shadowy operators.

Sars urges citizens to play their part by avoiding counterfeit goods and reporting illegal trade, whether it’s illicit cigarettes, poached wildlife products, or unregulated precious stones.

“Stopping illicit trade isn’t just about law enforcement, it’s a collective effort,” Sars emphasizes.

New Strategies in the Fight

To curb the illegal cigarette market, Sars is boosting oversight in key areas. These include tighter monitoring of cigarette exports, improving tracking during transit, partnering with tobacco experts to spot illicit products, and ramping up retail inspections.

A revealing study by Ipsos, commissioned by British American Tobacco, found that nearly 70% of retailers sell cigarettes below the legally required minimum tax level, with hotspots in the Eastern, Northern, and Western Cape and North West. The situation worsened in 2025, with illicit sales reaching 76.6%, a dramatic jump from 27% in 2022.

A National Challenge, A Shared Responsibility

For many South Africans, the illicit trade feels like an invisible enemy weakening the country from within. The revenue lost here is revenue that should have built their communities, improved services, and supported development.

As Sars intensifies its fight, it’s clear the battle against illicit trade requires a united front, from government agencies, businesses, and the public alike. It’s a fight to reclaim the integrity of South Africa’s economy and ensure that tax revenue truly serves the people.

{Source: Moneyweb}

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