Regulatory updates - South Africa

South Africa is preparing for a significant shift in VAT administration as part of the South African Revenue Service’s (SARS) long‑term VAT Modernisation programme. Although a formal e‑invoicing mandate has not yet been enacted, recent strategic publications and stakeholder discussions confirm that structured e-invoicing and enhanced VAT reporting are central to SARS’s future operating model.

Strategic direction

SARS first outlined its intent to modernise VAT administration in 2023 through the VAT Modernisation Discussion Paper. This direction has since been reinforced by the SARS Modernization Whitepaper 3.0, the Strategic Plan 2025/26–2029/30, the Annual Performance Plan 2025/26, and the Mid‑Term Progress Report 2020–2025. Across these documents, e‑invoicing is positioned as a foundational reform to improve VAT visibility, reduce fraud, and strengthen revenue collection.

Expected VAT compliance model

Draft proposals and stakeholder engagement indicate that South Africa’s future VAT framework will rely on structured e-invoices and near real‑time transmission of transaction data to SARS. Compliance monitoring is expected to move from periodic VAT returns toward transaction‑level controls, supported by automated cross‑checks and data analytics.

The emerging model is expected to support interoperability through decentralised service providers, enabling compliant invoice exchange between businesses while ensuring consistent data reporting to SARS.

Timeline

While indicative timelines discussed by stakeholders reference phased implementation from 2028, this remains subject to confirmation through formal legislation and technical guidance.

On August 16, 2025, the National Treasury and the South African Revenue Service (SARS) released the 2025 Draft Tax Administration Laws Amendment Bill (TALAB) for public comment, open until September 12, 2025. The bill provides the legislative foundation for implementing real-time VAT reporting and digital tax administration.

As previously analyzed, the bill is designed to enable SARS’s VAT Modernisation Project, which aims to transform the country’s VAT system through digital innovation and improved compliance mechanisms.

A central feature of the project is the introduction of real-time data transmission from vendors to SARS. This shift will significantly change how VAT is reported, monitored, and enforced.

The project will also cover the following objectives:

• Digitizing tax processes to improve efficiency and enhance taxpayer interaction,
• Reducing the VAT gap, currently estimated at R800 billion annually,
• Streamlining administration for both businesses and SARS through automation and integration.

On March 11, 2025, SARS published an official letter obliging taxpayers to include invoice data in all electronic customs declarations submitted to SARS.

If invoice data is missing on the customs declaration, there will be a higher chance of it being selected for inspection or audit.

The regulation became effective on April 1, 2025.