Tax professionals expect the South African Revenue Service (Sars) to release the full framework for VAT e-invoicing later this year.
The South African Institute of Taxation (SAIT) believes it will mark a significant step in Sars’ VAT modernisation initiative, the phased rollout of which it expects to begin this year, with full operational capability targeted for 2028.
Provision for e-invoicing, e-reporting and an interoperability framework — the cornerstone of the VAT modernisation strategy — was made in the 2025 Tax Administration Laws Amendment Bill.
Sars spokesperson Siphithi Sibeko said among the aims of the strategy is to address substantial administrative inefficiencies and revenue losses.
“To ensure a seamless transition, the initiative will entail close collaboration and comprehensive stakeholder engagement over the next five years. Further detailed information will be shared during the planned consultations dedicated to this purpose.”
The e-invoicing framework was first referenced in the 2023 draft proposals. SAIT said in a statement that the release of the full framework would mark “a significant step in Sars’ broader modernisation agenda, which is rapidly shifting South Africa’s tax environment toward real-time data transmission, automation and increased transparency”.
SAIT acting deputy CEO Keitumetse Sesana said the VAT modernisation programme offers the potential for a more predictable, efficient compliance environment but will also place a big responsibility on businesses to ensure systems, data and processes are prepared for the new level of transparency.
For many businesses this means fewer documentation requests, faster verification cycles and improved refund turnaround times. Compliance will naturally embed itself into daily operations, rather than remaining an isolated monthly task.
— Keitumetse Sesana, SAIT acting deputy CEO
She said under the new system Sars would gain earlier, richer and more accurate visibility of business activity, long before VAT returns are formally submitted.
“The upcoming e-invoicing regime promises a more streamlined, less administratively burdensome experience for taxpayers whose systems are aligned with Sars’ new requirements,” Sesana said.
“Digitally structured invoices, validated VAT numbers and automated data flows will allow VAT information to be transmitted directly from accounting systems into Sars in near real time.
“For many businesses this means fewer documentation requests, faster verification cycles and improved refund turnaround times. Compliance will naturally embed itself into daily operations, rather than remaining an isolated monthly task.”
The system would give Sars unprecedented insight into the operations of vendors, she said. Real-time data from banks, accounting systems and third-party platforms would increasingly allow the tax authority to detect discrepancies, often before a taxpayer became aware of them.
“Filing low or zero VAT returns while bank activity reflects trading will trigger automated risk flags.
“Mismatches between invoicing patterns and VAT declarations will be surfaced immediately.
“Understatement penalties have become stricter, and the margin for ‘honest mistake’ classifications has narrowed significantly,” Sesana noted.
She said in this environment compliance will become a systems issue first — and a tax issue second.
“Accuracy at the point of data creation will define the new compliance landscape. Every invoice, credit note and adjustment entered into financial systems must be correct from the outset.
“VAT numbers must be validated in real time. Controls against duplication, incorrect sequencing and inconsistent tax treatment must be embedded within accounting platforms.
“Sars’ risk engines will increasingly analyse behavioural patterns and detect gaps as they occur.
“Tax compliance status (TCS) will become a near-instant indicator of reliability, affecting access to tenders, supply chains and financing. This will be an immediate step in curbing, among others, the prevalence of VAT refund fraud.
“As the visibility of transactional data increases, the cost of weak internal controls rises exponentially,” Sesana said.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.