The South African Revenue Service (SARS) has called for public comment on the Value-Added Tax (VAT) Modernisation Discussion Paper of 2023, which outlines a new digital VAT model to modernise VAT administration.
According to SARS, the transformation will enable a long-term shift to a digitally driven, transparent and resilient VAT administration.
“The Consultation Paper outlines a proposed Digital VAT Model that brings together e-Invoicing, an Interoperability Framework and e-Reporting to reposition VAT administration for the economy, ease compliance obligations and strengthen oversight.
“The proposals form part of SARS Modernisation 3.0 and seek to enable the secure, structured and near real-time flow of VAT transaction data across the VAT value chain,” the revenue service explained in a statement on Monday.
SARS said the feedback from the 2023 Discussion Paper on Modernisation has greatly enriched the direction for VAT modernisation.
“We have incorporated these inputs and made significant progress from the initial position and included the best practices from our peers and multilateral organisations’ consultations.
“This Consultation Paper therefore embodies a well-researched and inclusive process, reflecting stakeholder comments and proposals, international best practice and continuous refinement of the VAT Modernisation proposals,” SARS said.
SARS Commissioner, Dr Johnstone Makhubu, said the release of the Consultation Paper marks an important milestone in modernising South Africa’s VAT administration system.
“VAT Modernisation is a major step in reshaping how VAT is administered in South Africa. It seeks to move us from a system that is still too dependent on manual processes and retrospective verification, to one where VAT compliance becomes part of the systems businesses already use every day.
“It is SARS’s belief that this modernisation of service will reduce the burden on compliant vendors, strengthen compliance and safeguard the revenue needed to fund South Africa’s development priorities,” the Commissioner said.
He added that the proposed Digital VAT Model is intended to deliver practical benefits for both SARS and VAT vendors.
For SARS, the secure sharing of reliable VAT transactional data is expected to provide clearer visibility over VAT transactions, more accurate and reliable data, stronger risk-based compliance oversight and enhanced ability to detect and respond to fraud and close the VAT compliance gap.
VAT vendors are expected to benefit from a simpler, more predictable compliance experience, lower administrative effort and cost, clearer visibility and faster, more efficient handling of VAT information.
The wider economy could also benefit from improved data quality, reduced duplication, trusted digital exchange among businesses, service providers, and SARS, simpler business processes, smoother trade, efforts to narrow the VAT compliance gap, and a more transparent and trusted tax ecosystem.
“We are seeking practical, evidence-based input to ensure that the final approach is practical, implementable and suited to South Africa’s economic realities.
“When done well and with high-quality stakeholder input, this work can significantly modernise VAT administration for the benefit of vendors, the economy and the fiscus,” Makhubu said.
The long-term vision is a VAT system where tax compliance becomes a seamless part of ordinary business activity.
“We are, however, clear that this must be developed in consultation with stakeholders so that the final model is secure, inclusive and aligned to South Africa’s needs. The modernisation process marks a paradigm shift in the use of data and advances SARS’s Vision of building a Smart Modern SARS,” the Commissioner said.
The Consultation Paper emphasises that the proposed Digital VAT Model will be implemented through a phased and consultative approach.
“Stakeholder feedback will help shape the policy choices, technical design, implementation sequencing, readiness requirements, costs, risks, benefits, governance arrangements, standards and safeguards.
“This paper is therefore the beginning of a long-term reform of the VAT ecosystem. SARS calls on all impacted and interested stakeholders to study the Consultation Paper and submit written comments by 16 October 2026.”
The Consultation Paper is available on the SARS website: https://www.sars.gov.za/vat-modernisation-consultation-paper-august-2026/
Comments must be submitted through the response mechanism provided in the Consultation Paper. -SAnews.gov.za
