Jashwin Baijoo | Partner | Head | Strategic Engagement & Compliance | Tax Consulting SA | mail me |
The South African Revenue Service (SARS) recently surpassed R2 trillion in net revenue collection for the 2025/26 fiscal year. This milestone marks the highest revenue collected in the country’s democratic era. It also highlights SARS’s commitment to effective tax administration.
In particular, SARS continues to enforce sanctions for non-compliance through SARS’ targeted compliance programmes. Despite several challenges, SARS has maintained strong performance. These challenges include a sluggish domestic economy, geopolitical tensions, global supply-chain disruptions and a growing illicit economy. Nevertheless, SARS improved voluntary compliance and facilitated legitimate trade. As a result, it supported overall fiscal health.
SARS’ key compliance drivers
The revised revenue estimate for 2025/26 required 8.2% year-on-year growth. This equates to R151.7 billion. SARS not only met this target but exceeded it. Consequently, it demonstrated resilience and the effectiveness of SARS’ targeted compliance programmes.
Significant contributions came from major tax categories. These include domestic Value-Added Tax and provisional tax collections on Corporate Income Tax. By the end of March 2026, these contributions produced revenue surpluses.
Commissioner Kieswetter has taken a firm stance against non-compliance. He also addressed the growth of the illicit economy as his tenure concludes:
There is no such thing as a cheap deal in the illicit economy, and the real cost is paid by society at large. We will not allow criminal syndicates to hollow out the tax system. SARS, working with other law-enforcement agencies, is determined to disrupt, dismantle and shut down illicit trading networks and to make non-compliance hard and costly.
To ensure non-compliance remains hard and costly, SARS relies on several key drivers.
Notably, these align with SARS’ targeted compliance programmes:
- Debt cash collections.
- Preventing impermissible and fraudulent refund claims.
- Voluntary disclosure interventions to regularise tax affairs.
- Countering syndicated tax and customs crimes, valuation fraud, and customs seizures.
- Applying data science and AI to identify and mitigate compliance risks and safeguard the fiscus.
Furthermore, SARS reinforced its strategic objective of making non-compliance hard and costly. Interventions from SARS’ Compliance Programme generated R316.39 billion in compliance revenue. This reflects a R12.4 billion year-on-year increase. Therefore, SARS’ targeted compliance programmes continue to deliver measurable results.
With enhanced detection capabilities, SARS now focuses on both past and future non-compliance. As a result, correct tax and legal guidance has become critical. The most prudent approach is to heed SARS’ warning. Non-compliance will be hard and costly for offending taxpayers. In addition, the Tax Administration Act outlines numerous criminal offences for non-compliance.
SARS Modernisation 3.0 – the age of AI
In addition to revenue achievements, SARS recently introduced its Modernisation 3.0 initiative. This initiative aims to enhance taxpayer services and streamline operations. It will do so through innovative digital technologies that support SARS’ targeted compliance programmes.
The programme will introduce a Unique Digital Identity for taxpayers. This system will integrate biometric verification and two-factor authentication. Consequently, it will secure interactions with SARS.
SARS has clearly stated its intent to leverage technology. It continues to adopt AI, data science, and machine learning algorithms. These tools help counter criminality and strengthen compliance enforcement. Moreover, data-driven insights now inform SARS about taxpayer transactions. AI reduces manual processing time and limits human error. As a result, SARS improves both efficiency and accuracy.
An entire team is no longer required to analyse these records manually. Instead, tech-savvy professionals now work alongside AI systems. This collaboration allows SARS to access comprehensive datasets. Consequently, it enables more robust evaluations of taxpayers’ financial activities.
These developments signal the need for greater diligence in tax record-keeping and reporting. SARS remains clear in its mandate. It will collect revenue and eradicate non-compliance using all available means.
Rise of the machines = eradication of non-compliance
SARS has refined its modern debt collection approach. It no longer follows a loose process. Instead, it applies advanced technology, machine-learning algorithms, agentic AI and sophisticated data science. These tools improve taxpayer and trader compliance. They also enhance service delivery.
SARS has emphasised a “no service” model. In this model, tax processes occur seamlessly. For example, more than 6 million taxpayers received auto-assessments last year. This demonstrates the efficiency of SARS’ targeted compliance programmes.
Now is not the time to take risks. SARS has established itself as a highly competent revenue authority. Therefore, compliance remains the most effective and safest approach. Importantly, SARS stands ready to assist taxpayers in meeting their obligations.
In conclusion
As a rule of thumb, taxpayers should address all SARS correspondence comprehensively. A strong, multi-disciplinary tax, legal and financial team is essential. This “A-Team” ensures proper handling of all matters. In cases of non-compliance, legal professional privilege becomes critical. This is especially true where SARS suspects or has detected current or historical risks. Early intervention can significantly mitigate exposure.
Such an approach protects taxpayers and their clients from severe consequences. It also allows professionals to implement appropriate legal safeguards. These measures can prevent SARS from initiating aggressive collection actions. Ultimately, engaging the right A-Team ensures accurate advice and full tax compliance.