SARS is coming after employers in South Africa for these 4 things

The South African Revenue Service (SARS) is getting better-equipped to take on employers who neglect their tax affairs involving contractors, benefits, travel, and tax incentives.

With tax season 2025 fast approaching, employers in South Africa are expected to finalise their Annual Declarations before the 31 May deadline.

SARS has emphasised the importance of these submissions for the coming tax season as it uses this data to issue accurate auto-assessments or pre-populated tax returns for individuals.

The taxman will be under significant pressure in 2025 to clamp down on all aspects of personal income as it has been tasked by the National Treasury to close the budget gap, and has been given billions in addtional funding to do so.

According to Tax Consulting South Africa, this pressure means that the revenue service will likely be “dusting all corners” to ensure that employers and employees are fully tax compliant.

In the 2024/25 fiscal year, SARS reported a R81.8 billion (12.6%) increase in net personal income tax collections.

This surge was largely attributed to above-inflation growth in Pay-As-You-Earn from the Finance and Community Services sectors.

Unexpectedly high revenue from Two-Pot retirement withdrawals also contributed, yielding revenue of R12.9 billion—more than double the projected R5 billion, Tax Consulting said.

“SARS also noticed a modest yet meaningful uptick in the Voluntary Compliance Index from 75.10% to 75.48% year-on-year.” “

“While this may seem incremental, it reflects improved payroll discipline across the board—and hints at the value SARS places on even small behavioural shifts when scaled across a national taxpayer base,” it said.

The group said that SARS’ focus in 2025 will likely home in on this area of income tax, with even more resources being directed to enforcement in areas of neglect.

This would include smaller focus areas that employers tend to overlook or not pay too much mind to, such as:

• Misclassified contractors, who perform as employees but fall outside the PAYE net;
• Fringe benefits, such as subsidised housing or company vehicles, that may be under-declared;
• Untidy travel and subsistence claims, often lacking proper logbooks or supporting documents;
• Abuse of the Employment Tax Incentive (ETI), where eligibility may be stretched —or fabricated.

“Historically, these areas have been difficult to police at scale. But with more auditors, analysts, and inspectors in play, the opportunity to run tighter payroll diagnostics grows significantly,” Tax Consulting said.

This is notable, as the tax specialists have caught wind of a new operation within SARS, purportedly called Operation AmaBillions, a special compliance drive targeting tax debt and outstanding returns.

The initiative is expected to generate an additional R70 billion over the next three years.

SARS is building an elite tax team

One of the core aspects of SARS’ reported new operation is a near-term boost in numbers, with the taxman looking to use its new resources to bolster its forces by 500 people.

In the longer term, this is expected to increase to 1,500, Tax Consulting said.

These new hires will reinforce SARS’ other new hires in the past two years, where the service has acquired specialised skills to take on key tax demographics.

On top of the new ‘outstanding tax’ crew, SARS has built highly specialised units to take on the tax affairs of high net worth inidividuals (HWI) and those with crypto assets.

The HWI unit has already paid off, with SARS collecting billions in tax from the focus on these individuals in the previous year.

The crypto unit, meanwhile, is expected to keep turning the screw on holders as the role of the digital assets become clearer in law.

Whether crypto, HWI or otherwise, the fact remains that SARS believes that as much as R500 billion in taxes remain uncollected, and it has already flagged tens of thousands of taxpayers who owe money.

Specifically, the group pointed to over 115,500 taxpayers who are showing “substantial economic activity” such as assets, bank flows, etc, who are not filing taxes.

It has launched 54,800 audit cases, with assessments to the value of R5.56 billion, for these individuals. So far, R1.36 billion has been collected.

Looking specifically at areas where taxes remain under-collected, SARS noted that it had identified eight sectors with the most non-compliant taxpayers in the country.

These include:

1. Mining and Quarrying (VAT, PAYE, and CIT);
2. Construction: Bricks, Ceramics, Glass, Cement and similar (VAT, PAYE, CIT);
3. Transport, Storage and Communications (VAT, PAYE, self-employed individuals)
4. Agencies and Other services (VAT, CIT and self-employed individuals);
5. Agriculture, Forestry and Fishing (VAT, PAYE and CIT);
6. Clothing and Footwear (VAT, PAYE and CIT);
7. Personal and Household services (VAT, PAYE, CIT);
8. Transport Equipment (VAT, PAYE, CIT)

In almost all of these sectors, PAYE is one of the focus areas.

“Employers who keep their PAYE affairs in order—accurate reporting, clean reconciliations, properly documented allowances—will find themselves better equipped to respond to scrutiny, or avoid it entirely,” Tax Consulting SA said.