The transport industry that makes R100 billion in South Africa – And pays almost no tax

South Africa’s minibus taxi industry generates an estimated R90 to R100 billion in revenue annually, while paying virtually no tax.

In March 2025, the Organisation Undoing Tax Abuse (Outa) said that formalizing and taxing the taxi industry could help to raise funds for the state.

Outa CEO Wayne Duvenage explained that formalizing the taxi sector, which is not currently within the tax base, could significantly broaden South Africa’s tax base.

“It’s not to punish the taxi industry. It’s to say you are formalised, you are businesses, you need to be brought into the net,” he said.

He argued that there was no reason why the local taxi sector, which mainly deals in cash, should not be taxed.

The Democratic Alliance (DA) expressed a similar viewpoint back in 2021 when it highlighted that the lucrative transport industry only contributes R5 million in taxes per year.

The low tax compliance rate of the South African minibus taxi industry was revealed in a reply to a DA parliamentary question.

“The Minister of Finance has revealed that only approximately R5 million in tax is collected from the entire minibus taxi industry,” the DA said.

“This means that the vast majority of taxi operators and owners are declaring no corporate tax income at all and are not paying payroll tax for their drivers and employees.”

It is illegal to under-declare income and avoid paying taxes, which is classified as a crime under the Tax Administration Amendment Act.

Those convicted of this crime can face a two-year prison sentence.

The DA called on the South African Revenue Service (SARS) to act against tax dodgers and ensure that the taxi industry pays its fair share.

Doing so is much easier said than done, however, as a significant portion of all fares collected by minibus taxi operators are paid in cash.

This means there is very little documented information about how much money these operators make and how much tax they should pay.

Taxi industry responds

The South African National Taxi Council (Santaco) has dismissed claims that the sector does not pay tax.

It stated that these claims are misguided and shallow, arguing that most taxi operators pay personal income tax individually.

Santaco spokesperson Mmatshikhidi Rebecca Phala told The Star newspaper that claims of tax evasion ignore how the taxi sector is structured and taxed.

“The taxi industry, in the main, is comprised of operators who run their businesses as sole proprietors,” she explained.

“This means they operate their businesses as individuals and continue to be taxed as individuals.”

she added that these individuals are issued tax clearance certificates by SARS, which they use for numerous reasons, such as their applications and renewals for operating licences.

Phala highlighted that the tax clearance certificates by SARS are a prerequisite for renewals of the operating licences.

However, she did concede that the country’s current tax framework does not fully accommodate the informal nature of the taxi industry.

“As such, currently, a large part of the taxi industry does not participate in the greater companies’ tax regime,” she said.

“The current structure of the tax reform needs to be re-examined to ensure a speedy resolution of this taxation loophole”.