The South African Revenue Service (SARS) has taken another significant step towards modernising VAT administration, releasing its VAT Modernisation Consultation Paper for public comment.

Published on 7 August 2026, the paper builds on SARS’s 2023 VAT Modernisation Discussion Paper and sets out proposals for a new Digital VAT Model. The aim is to move South Africa away from a system heavily reliant on manual processes and retrospective verification towards one in which VAT compliance is increasingly embedded in businesses’ everyday digital systems.

At the heart of the proposed model are three elements: e-Invoicing, an Interoperability Framework and e-Reporting. Together, these would enable the secure and structured flow of VAT transaction data across the VAT value chain, potentially in near real time.

For compliant VAT vendors, SARS envisages a simpler and more predictable compliance experience, with less administrative effort, improved certainty and faster processing of VAT information. SARS would, in turn, gain improved visibility over transactions, better-quality data and a stronger ability to identify compliance risks and VAT fraud.

The proposals form part of SARS Modernisation 3.0 and support its longer-term ambition for a tax system in which, for most taxpayers, “tax just happens” as part of ordinary business activity.

Importantly, SARS has emphasised that implementation will be phased and consultative. Stakeholder input will inform key decisions around technical design, sequencing, costs, governance, readiness requirements, standards and safeguards.

Businesses therefore have an important opportunity to help shape the future VAT environment.

Written comments on the Consultation Paper must be submitted by 16 October 2026 through the response mechanism outlined by SARS.

The Consultation Paper and further information are available on the SARS VAT Modernisation webpage: https://www.sars.gov.za/types-of-tax/value-added-tax/vat-modernisation/. Should you require assistance in this regard, please don’t hesitate to contact our offices.