The South African Revenue Service (Sars) will pay Microsoft and IBM a combined R2.75-billion over three years. The contracts were approved without open tenders, according to the Sars 2025/2026 annual report, TechCentral reported.
The Microsoft deal is worth R1.58-billion. It renews the Sars enterprise licence agreement with Microsoft and its support service. That works out to about R526-million a year.
The IBM contract is worth R1.17-billion over three years. It covers IBM hardware, software, maintenance, support and professional services.
The annual report lists both deals under “procurement by other means”. This means they did not follow normal competitive bidding. Both were recorded as “sole source (limited bid)” awards.
Sars bought both on the terms of framework agreements set up by the State IT Agency. Public bodies can use these agreements to buy from approved suppliers without running their own tenders.
The report shows other technology deals were also approved outside open tenders in 2025/2026. These include a R141.6-million, 24-month contract with Vodacom that runs from April 2026.
Sars also approved a R95-million change to a Software AG subscription and R63.8-million for Dell EMC maintenance and support. Orange Cyberdefense got R55-million for three years of security testing.
The tax agency is using more artificial intelligence. Pulse, an AI assistant for Sars staff, was launched in December 2025, according to the annual report.
Sars told parliament’s standing committee on finance that it had rolled out Microsoft Copilot. This is according to the Parliamentary Monitoring Group’s record of the meeting.
Lwazi, the AI assistant on the Sars website and app, had answered more than 2.7 million taxpayer questions by the end of March 2026. It had an 82.9% positive feedback rating.
Lwazi was launched on 15 November 2024. The previous annual report put its total at 805 000 questions by the end of March 2025. That points to about 1.9 million questions in the 2025/2026 financial year.
Taxpayers are also using other digital channels. Sars handled 4.4 million WhatsApp requests in 2025/2026. It handled 22.4 million requests through USSD, the text menu service that works on basic phones.
The annual report lists underfunding among the main risks Sars faces. Sars said it would build a business case for a different funding model.
Finance minister Enoch Godongwana gave Sars an extra R7.5-billion over the three-year medium-term budget period in his May 2025 budget speech.
Commissioner Johnstone Makhubu took over from Edward Kieswetter on 1 May 2026. He told MPs that Sars and national treasury were looking at the budget facility for infrastructure. This could pay for R7-billion to R10-billion of the Sars modernisation programme.
Sars has also asked for about R6.3-billion over the medium term for running costs. Part of this money would help replace an ageing workforce with an average age of 47.
Makhubu told MPs that crypto assets were more and more being used to move money out of the country. Sars expects to start applying the OECD Crypto-Asset Reporting Framework in the 2026/2027 financial year.
Source: this article is based on reporting by TechCentral. Image: TechCentral. Written with the help of AI and published by the Tzaneen Voice Technology desk. See our Editorial Standards.
Werner Jacobs covers technology for Tzaneen Voice. Werner reports on mobile networks, data prices, internet access, smartphones, apps, AI, cybersecurity and South African tech companies. Each story explains what a new product, price change or policy means for ordinary users in South Africa.