The South African Revenue Service (SARS) has proposed that businesses send Vat invoice details to it in near real time. The plan was set out in a consultation paper published in August 2026.
Under the proposal, businesses would issue invoices in a standard digital format. The relevant details would then be sent to SARS automatically.
SARS could use this information to pre-fill Vat returns for businesses to check and correct. It could also spot mistakes and missing amounts sooner. Public comments on the paper closed on 16 October 2026.
The details were set out in an analysis by four tax researchers, republished by Moneyweb from The Conversation. They are Amina Ebrahim and Maria Jouste of UNU-WIDER, Ada Jansen of Stellenbosch University and Adrienne Lees of the Institute of Development Studies.
Vat-registered businesses already file their returns online. At the moment, SARS checks supporting invoices only after a return is submitted, and only when it asks for them.
Vat is South Africa’s second-largest source of tax revenue. In 2024/25 it raised R457.8 billion after refunds, or 24.7% of all tax revenue. Personal income tax brought in 39.3%.
The researchers said a study put South Africa’s domestic Vat reporting gap at between 35% and 41% for the 2016 to 2020 tax years. This is the difference between Vat declared and what full compliance would have produced.
Estimated gaps differed by sector over the same period. They were about 47% in construction and about 5% in gold mining, the researchers said.
Some businesses lower their Vat bills by inflating purchases or hiding sales, the researchers said. Digital invoices let officials check claimed purchases against suppliers’ own records.
The researchers pointed to Uganda, which brought in electronic invoices from January 2021. In April 2022, about 5 000 larger firms had to link their accounting software directly to the system.
Those firms then reported 43% fewer purchases, and their reported Vat owed rose by nearly 150%. However, their reported sales also fell by 39%. The researchers said some firms appeared to switch to hiding sales instead.
In Rwanda, a study of records from 2012 to 2019 found electronic invoicing raised yearly Vat declared by about US$11 000 per firm. Audits of firms using the system added an estimated US$33 400 per firm.
In Ethiopia, electronic sales registers raised Vat payments by businesses in Addis Ababa by at least 48%. Yet about 42% of declarations studied for 2010 to 2016 still showed different sales figures for income tax and Vat.
“Collecting records is therefore only part of the task,” the researchers wrote. They said tax officials must also compare buyer and seller records and follow up on claims that do not match.
Refunds are another concern for businesses. A refund is due when Vat paid on purchases is more than Vat charged on sales. Slow payment leaves less money for running costs and investment.
A South African study found that roughly halving audits on refund claims, with faster processing, raised investment by 31% among affected firms. Their reported sales rose by 24%.
The researchers said smaller businesses may need support with software changes and staff training. SARS plans automated risk checks as part of the system.
The SARS roadmap places the pilot in 2029/2030. Phased rollout to businesses is set to start in 2030.
Source: this article is based on reporting by Moneyweb. Image: Moneyweb. Written with the help of AI and published by the Tzaneen Voice Business desk. See our Editorial Standards.
Anelisa Nkuna covers business and money news for Tzaneen Voice. Anelisa reports on the rand, fuel prices, interest rates, jobs, Eskom, Transnet, farming and company results. The aim is simple: explain what the numbers mean for household budgets, small businesses and workers in South Africa.