The South African Revenue Service (SARS) is seeking public comment on a proposed digital VAT model that could change how businesses manage invoicing, transaction data and tax compliance.
The Digital VAT Model forms part of SARS Modernisation 3.0 and combines electronic invoicing, an interoperability framework and e-reporting.
It is intended to enable the secure, structured and near-real-time exchange of VAT transaction data between businesses, service providers and SARS.
The proposed model could affect freight and logistics companies that process large volumes of invoices and rely on accounting and enterprise resource planning systems to manage commercial transactions.
SARS said the model was intended to reduce reliance on manual processes and retrospective verification by embedding VAT compliance into the systems businesses already used.
It could provide SARS with more accurate transaction data, improve risk-based compliance oversight and strengthen its ability to detect fraud.
VAT vendors could benefit from lower administrative costs, reduced duplication and faster handling of VAT information, according to the revenue service.
“VAT modernisation is a major step in reshaping how VAT is administered in South Africa,” SARS Commissioner Johnstone Makhubu said.
“It seeks to move us from a system that is still too dependent on manual processes and retrospective verification to one where VAT compliance becomes part of the systems businesses already use every day.”
The proposed system will be introduced in phases, beginning with preparation, development and testing before a voluntary pilot involving priority sectors.
The pilot is expected to run for about six months during 2029/30. A phased roll-out is planned to begin in 2030 and continue for approximately three years, with voluntary adoption preceding mandatory participation.
The order in which sectors enter the system will depend on factors including their readiness, transaction volumes, compliance risks and indications of a VAT gap.
SARS is seeking input on the model’s design, implementation costs, risks and benefits, taxpayer and software-provider readiness, governance, standards and safeguards.
Stakeholders have until October 16 to submit comments through the response mechanism provided in the consultation paper.
