The South African Revenue Service (SARS) will use part of a R6.9 billion special appropriation to speed up its modernisation programme, including the eventual automation of VAT assessments, SARS Commissioner Johnstone Makhubu has said.

Makhubu said SARS expects to receive between R4 billion and R4.5 billion of the R6.9 billion. “We are using this money to accelerate our modernisation,” he said.

What the money is for

Makhubu named three priorities in SARS's demand plan, which was published with National Treasury:

  • VAT modernisation
  • excisable products, where SARS sees significant leakage
  • refreshing SARS's ICT infrastructure

He said SARS wants to eventually automate VAT assessments, as it already does for personal income tax. Over the next two to three years SARS plans to introduce track-and-trace technology to identify leakages, particularly in alcohol and tobacco.

The funding is meant for the 2026/27 financial year, and SARS is negotiating with Treasury to carry some of it into the following year. Makhubu also said SARS wants more funding for technology to detect diesel mixed with cheaper paraffin, which affects tax collections.

Revenue is running ahead of forecast

Finance Minister Enoch Godongwana announced in the medium-term budget on 21 October that Treasury expects R17 billion more revenue this financial year than first forecast. Makhubu said SARS was already R15 billion ahead of earlier projections at the half-year, with company taxes the main driver, led by mining, finance, banks and manufacturing.

He said domestic VAT also helped as households kept spending, and that dividends declared in April and May added to collections. Higher gold and platinum prices supported collections, but he warned that commodity prices could fall. “We're going to assume that it is going to deteriorate over the second half and will not repeat in the new year,” he said.

What we do not yet know

  • Where the remaining R2.4 billion to R2.9 billion of the R6.9 billion will go has not been stated in the reports we reviewed.
  • What automated VAT assessments will mean for businesses, and when they will start, has not been set out.
  • No change to VAT rates has been reported.