SARS making big auto assessment change in South Africa
The South African Revenue Service (SARS) has big plans to modernise its systems and is pushing toward greater automation, including for Value Added Tax (VAT).
The taxman has now been allocated additional funding in the mid-term budget specifically for this purpose.
Finance Minister Enoch Godongwana tables his Medium Term Budget Policy Statement (MTBPS) in October.
As part of the updated budget, the National Treasury also submitted the Special Appropriation Bill 2026, which provides for an additional R6.9 billion beyond the Adjustments Appropriation Bill.
The funding covered four allocations, the largest of which was for SARS to accelerate its modernisation programme.
Speaking to 702 after the Budget, SARS Commissioner Johnstone Makhubu said that SARS expects to receive an additional in-year allocation of between R4 billion and R4.5 billion from National Treasury.
He said this money will be used to accelerate SARS’s modernisation programme and target areas where a tax gap exists in the ecosystem.
Specifically, Makhubu said the funding will be used to enhance technology, including deploying track-and-trace systems for accessible products and replacing outdated markers used to detect fuel adulteration.
The additional funding will also be directed towards other modernisation goals, including VAT modernisation.
Earlier this year, SARS published a VAT Modernisation Consultation Paper, where it laid out its aspirations for “a future in which tax just happens” by leveraging data and technology.
Broadly, the VAT modernisation plan is similar to that of the income tax modernisation that has taken place over the past decade.
This means using data science, artificial intelligence, and digital services and embedding them into the VAT ecosystem.
“The direction for VAT modernisation is to connect SARS across the VAT value chain to every point of sale, using e-Invoices, an Interoperability Framework and e-Reporting,” SARS said.
This will “enable trusted, structured, and near real-time transactional data flows”.
The end goal, the tax service said, is to lay the foundation for SARS-led VAT auto-assessment.
Auto assessments for individual taxpayers were introduced in 2021 and have expanded rapidly, bringing more South Africans onto the system.
Over 6 million taxpayers were auto-assessed in 2026, and this is expected to increase again in 2027.
The technology has revolutionised the taxman’s collection capabilities and is currently being expanded to provisional taxpayers on a trial basis.
SARS targets are going up
SARS tax collections in 2026 have overshot the targets set in the February Budget, prompting the National Treasury to raise the bar.
In the MTBPS, Godongwana announced a new revised estimate for tax collections at a record R2.144 trillion.
This is an increase of R17.1 billion compared to the R2.127 trillion February 2026 Budget estimate.
At the time, the national tax service noted that the upward adjustment to the target came despite deteriorating economic conditions, with the Treasury cutting its 2026 GDP growth forecast from 1.6% to 1.2%.
“Despite improved electricity reliability, which supports economic activity, structural constraints such as logistics and infrastructure challenges continue to hinder South Africa’s growth prospects,” SARS said.
Nevertheless, the year-to-date tax collections show that the country’s revenue system is resilient.
To this point, SARS Commissioner Makhubu noted that, as of 30 September 2026 (H1 2026), the taxman collected R992.2 billion in net revenue.
This includes gross collections of R1.231 trillion and refund payments totalling R239.1 billion.
Net revenue was R15.5 billion, or 1.6%, above the February 2026 Budget estimate, and R67.4 billion, or 7.3%, higher than the corresponding period last year, highlighting the outperformance.
While SARS has delivered significant refunds to taxpayers, it has also ramped up its pursuit of non-compliant taxpayers.
In the first six months of the financial year, compliance interventions secured a preliminary R137.7 billion, the commissioner said.
This comprised R76.3 billion in direct cash collections and a further R61.3 billion in prevented revenue leakage.
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