SARS Is Modernising: More Funding, More Automation and Bigger Targets
The South African Revenue Service (SARS) is pushing ahead with a major modernisation drive, with greater automation at its core, including for Value Added Tax (VAT). It has now received extra funding in the mid-term budget specifically for this purpose.
The extra funding
As part of the updated budget, National Treasury submitted the Special Appropriation Bill 2026, which provides an additional R6.9 billion beyond the Adjustments Appropriation Bill. It covers four allocations, and the largest is for SARS to accelerate its modernisation programme.
SARS Commissioner Johnstone Makhubu told 702 that SARS expects an additional in-year allocation of R4 billion to R4.5 billion. The money will be used to speed up modernisation and to target areas where a tax gap exists in the ecosystem.
What the money will buy
According to Makhubu, the funding will go towards:
- Enhanced technology, including track-and-trace systems for accessible products
- Replacing outdated markers used to detect fuel adulteration
- VAT modernisation, among other modernisation goals
VAT modernisation: “tax just happens”
Earlier this year, SARS published a VAT Modernisation Consultation Paper setting out its aim of a future in which “tax just happens,” using data and technology. The plan broadly mirrors the income tax modernisation of the past decade, embedding data science, artificial intelligence and digital services in the VAT system.
SARS says the direction is to connect it across the VAT value chain to every point of sale, using e-invoices, an Interoperability Framework and e-reporting. This would enable trusted, structured and near real-time transactional data flows. The end goal is to lay the foundation for SARS-led VAT auto-assessment.
Auto-assessments keep growing
Auto-assessments for individuals were introduced in 2021 and have expanded rapidly. More than 6 million taxpayers were auto-assessed in 2026, and that number is expected to rise again in 2027. The technology has transformed SARS’s collection capabilities and is now being trialled for provisional taxpayers.
Collection targets go up
SARS collections in 2026 have overshot the targets set in the February Budget, so Treasury has raised the bar. In the MTBPS, Finance Minister Enoch Godongwana announced a revised estimate of a record R2.144 trillion, up R17.1 billion from the February estimate of R2.127 trillion.
That upgrade came despite weaker economic conditions. Treasury cut its 2026 GDP growth forecast from 1.6% to 1.2%. SARS pointed to structural constraints such as logistics and infrastructure challenges, even with improved electricity reliability.
How collections look so far
Makhubu said that as of 30 September 2026 (H1), SARS had collected R992.2 billion in net revenue:
| Measure |
Amount |
| Gross collections |
R1.231 trillion |
| Refund payments |
R239.1 billion |
| Net revenue |
R992.2 billion |
Net revenue was R15.5 billion (1.6%) above the February Budget estimate and R67.4 billion (7.3%) higher than the same period last year.
Pursuing non-compliance
While SARS has paid out significant refunds, it has also stepped up its pursuit of non-compliant taxpayers. In the first six months of the financial year, compliance interventions secured a preliminary R137.7 billion, made up of:
- R76.3 billion in direct cash collections
- R61.3 billion in prevented revenue leakage
What it means for you
- Individuals: Expect auto-assessments to keep expanding, so make sure the information SARS holds about you is accurate.
- Businesses: VAT is heading towards e-invoicing and near real-time reporting. Start thinking about whether your accounting systems can support transaction-level data.
- Everyone: More data and automation make discrepancies easier for SARS to spot.
The bottom line
SARS is investing in technology to collect more of the tax already owed, and the results so far are strong. For taxpayers, the direction is clear: more automation, more data and fewer places to hide errors. Accurate, well-kept records are the best preparation.
Source: SARS Commissioner Johnstone Makhubu’s comments to 702 and National Treasury MTBPS figures, as reported in the original article.
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