South Africa is preparing for significant changes to how Value-Added Tax (VAT) is managed and reported, as South African Revenue Service moves ahead with a major VAT modernisation programme. The changes will introduce a stronger digital framework aimed at improving transparency, reducing fraud, and tightening tax compliance across the economy.
At the centre of the reform is the planned introduction of VAT e-invoicing, which will require businesses to submit invoice data electronically, allowing SARS to access VAT information in near real time. This marks a shift away from the current system that relies largely on periodic VAT returns, giving the tax authority earlier insight into business activity.
According to the South African Institute of Taxation, the new system is expected to be rolled out in phases from 2026, with full implementation targeted for 2028. While the reforms are intended to streamline compliance and speed up processes such as VAT refunds, they will also place greater responsibility on businesses to ensure accurate and up-to-date invoicing and record-keeping.
Although there is no indication of a VAT rate increase at this stage, businesses — particularly small and medium enterprises — may face additional costs related to software upgrades and compliance systems. Consumers are not expected to see direct changes immediately, but some businesses may pass on increased administrative costs, potentially affecting prices over time.