SARS aspires for a future in which tax just happens for most of taxpayers by leveraging data and technology. To this end, and pursuant to the VAT Modernisation Discussion Paper of 2023, the South African Revenue Service (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 modern, transparent and efficient VAT administration system in South Africa.
The feedback from the 2023 Discussion Paper on Modernisation has greatly enriched the direction for VAT modernisation and we are thankful to all stakeholders for their valuable inputs. 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.
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 transformation will enable a long-term shift to a digitally driven, transparent and resilient VAT administration. For taxpayers, this delivers a simpler, more predictable experience with reduced effort, increased certainty where “tax just happens”.
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,” said Makhubu.
“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.”
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,” said Makhubu.
“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. 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 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.
