Edward Kieswetter is on the hunt for an extra R20 billion

The South African Revenue Service (SARS) says that its tax collection measures in 2025 have to pull in at least R20 billion more this year, following the tabling of the new budget.

Finance Minister Enoch Godongwana presented his third budget for 2025 on Wednesday, which saw the removal of the reviled VAT increase.

Because there is no longer an easy revenue boost from VAT, spending had to be cut by almost R70 billion over three years, with the revenue undershooting previous projections by R62 billion.

As a result, the minister announced the 2025/26 financial-year revenue estimate of R1.986 trillion.

This revenue estimate comes against the backdrop of SARS’ final unaudited revenue outcome for 2024/25, which is R1.86 trillion.

SARS said that the new estimate will be challening, given that there have been huge shifts in global economic assumptions since the last budget.

Global growth has experienced a downward revision by the International Monetary Fund to 2.8%, including a downward revision for South Africa to just 1.0%.

This will have a direct impact on tax collections.

Nominal GDP for 2025/26 has been revised downwards to R7.87 trillion (+6.3% y/y) from the reported R8.00 trillion (+7.0% y/y) in the Budget 2025 and R8.02 trillion (+6.5%) in the MTBPS 2024.

In real terms, the economy is projected to grow by 1.4% in 2025/26, down from 1.9% and 1.6% in Budget 2025 and the MTBPS 2024, respectively.

“Given the current tough domestic and global economic conditions, the R1.986 trillion revenue estimate is a challenging estimate,” SARS said.

The tax service said the estimate announced by Godongwana imposes the responsibility on SARS to implement revenue raising initiatives.

Debt collection is initiative it will focus on, it said, vowing to accelerate work on collecting all debt. However, it stressed that these efforts must result in a minimum collection of R20 billion.

Godongwana noted that the taxman has been allocated an additional R7.5 billion over the medium term, which he expects to bring in R20 billion to R50 billion in additional collections.

While much of this funding will go directly into collection efforts over the period, the money will also be spent on equipping the tax service to continue strengthening its technology and systems.

Tax experts have already warned South Africans that the SARS is under immense pressure to fulfil its mandate and will likely not hold back when chasing non-compliance.

In addition to its focus on high net worth individuals and the thousands of taxpayers who are living lifestyles that don’t match their income, it is also expected to chase after employers and businesses for neglected admin.

How SARS plans to meet its target

The revenue service also outlined additional measures it will focus on to meet the new target. These include:

1. Leaning into advanced tech to identify gaps

Refining and using advanced data analytics and artificial intelligence to detect tax-compliance risks, close the tax gap, and improve overall compliance rates.

By integrating expanded third-party data sources, such as banking and payroll information, the system can increasingly automate tax assessments and more effectively identify underreported income, thereby strengthening efforts to combat tax evasion.

2. Taking on the illicit economy

SARS wants to combat the illicit economy, especially in high-revenue sectors such as tobacco, alcohol, and fuel.

Through enhanced enforcement against smuggling, counterfeit goods, and black-market transactions, SARS aims to recover substantial revenue losses and deter future non-compliance within these sectors of the informal economy.

3. Chasing the informal sector, entrepreneurs and the self-employed

It said it will accomplish this by systematically identifying and registering individuals and businesses that have previously operated outside the formal tax system.

Targeting the hard-to-tax sectors in the informal economy, particularly small enterprises and self-employed individuals, supports increased revenue mobilisation and helps to reduce reliance on a narrow tax base.