Cape Town – The South African Revenue Service (SARS) has proposed a major overhaul of the country’s VAT administration system, with a new digital model aimed at making tax compliance a more seamless part of businesses’ everyday operations.
SARS has released its VAT Modernisation Consultation Paper for public comment, setting out proposals for a more modern, transparent and efficient VAT administration system.
The proposals build on SARS’s 2023 VAT Modernisation Discussion Paper and incorporate feedback from stakeholders, as well as international practices drawn from consultations with other revenue authorities and multilateral organisations.
At the centre of the proposed reforms is a Digital VAT Model, which brings together e-Invoicing, an Interoperability Framework and e-Reporting.
SARS says the model would enable the secure, structured and near-real-time exchange of VAT transaction data across the tax value chain.
The proposed system forms part of SARS Modernisation 3.0 and is intended to move VAT administration away from manual processes and retrospective compliance checks towards a digitally driven system.
Significant change
SARS Commissioner Dr Johnstone Makhubu said the proposed reforms represented a significant change in how VAT would be administered.
“VAT Modernisation is a major step in reshaping how VAT is administered in South Africa,” Makhubu said.
He said the reforms were intended to reduce the system’s reliance on manual processes and verification after transactions had already taken place.
The long-term objective is for VAT compliance to become increasingly integrated into the systems businesses already use to conduct their daily operations.
What this could really mean for digital VAT model businesses. SARS says the proposed model could simplify the compliance process for VAT vendors by reducing administrative work and improving access to VAT-related information.
Businesses could also benefit from greater visibility of their VAT data and more efficient processing of information.
For SARS, the increased availability of transaction data could improve the quality and reliability of information used to monitor compliance.
The revenue service says this could strengthen risk-based compliance measures and improve its ability to identify and respond to fraud and other forms of non-compliance.
Media Release: SARS invites public input on a new digital VAT model to modernise VAT administration
SARS is pleased to release the VAT Modernisation Consultation Paper for public consultation and comment, calling on all impacted and interested stakeholders to contribute to a… pic.twitter.com/BAqDThpTXs
— SA Revenue Service (@sarstax) August 17, 2026
The proposed changes could also have broader implications for businesses and the economy by reducing duplication and enabling more trusted digital exchanges between businesses, service providers and SARS.
However, the final design and implementation of the system have not yet been determined.
But SARS seeks input before implementation. SARS says the Digital VAT Model will be developed through a phased and consultative process rather than introduced as a completed system.
Stakeholders are being asked to provide input on areas including policy, technical design, implementation timelines, readiness requirements, costs, risks, benefits, governance, standards and safeguards.
Makhubu said stakeholder participation would be important in ensuring that the final model was practical and suited to South Africa’s economic environment.
Meaningful consultation
“We are seeking practical, evidence-based input to ensure that the final approach is practical, implementable and suited to South Africa’s economic realities,” he said.
SARS says meaningful consultation will also be important in ensuring that the final system is secure, inclusive and aligned with the needs of businesses and other affected stakeholders.
The modernisation is ultimately aimed at changing how VAT compliance is managed, with SARS seeking to make it less of a separate administrative exercise and more integrated into ordinary business activity.
“The long-term vision is a VAT system where tax compliance becomes a seamless part of ordinary business activity,” Makhubu said.
comments are open for the public until October. SARS has invited impacted and interested stakeholders to study the VAT Modernisation Consultation Paper and submit written comments.
The deadline for submissions is 16 October 2026.
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Compiled by Glaan Sibuyi
