SARS E-Invoicing system to enable real-time VAT assessments for businesses – EY
By Larry Claasen
THE move by the South African Revenue Service (SARS) to adopt e‑invoicing will have a marked impact on businesses when it comes to accounting for VAT, as it moves them from managing it like a periodic to a daily operation, says accounting firm EY.
This follows the tax authority saying in its Modernisation 3.0 white paper released late last year that it wanted to introduce an intelligent digital VAT system that was embedded with data science and artificial intelligence, enabling it to monitor compliance in close to real time.
According to the paper, the current VAT system imposed a “substantial burden on vendors,” making it susceptible to fraud and non‑compliance.
By adopting a best‑practice model, SARS hopes to “enhance the taxpayer experience” by offering automated tax‑data submissions, and also eventually assessing VAT liabilities by drawing on trusted data sources across the value chain, as well as harmonised cross‑border trade.
For businesses, however, it means their VAT operations go from a process that is managed retrospectively to one that provides near real‑time VAT validation, according to EY’s report, E‑invoicing in South Africa: what CFOs and COOs need to do now.
As stated in the report, e‑invoicing would not only become mandatory, but would also force business leaders to put in place finance, data and systems to operate reliably in a near real‑time compliance environment.
Those businesses that prepare for this change will be able to adapt to the requirements better, the report said. This means organisations that strengthen their data quality, process discipline and systems integration will be well positioned.
“Organisations that address these fundamentals early will be better equipped to manage VAT risk proactively, rather than reacting once compliance pressure intensifies,” said EY Africa indirect tax leader, Redge De Swardt.
“For executives, the priority is not tracking regulatory timelines, but strengthening the foundations that support reliable transaction data. Organisations that address these fundamentals early will be better equipped to manage VAT risk proactively, rather than reacting once compliance pressure intensifies.”
Though adopting a new VAT system could turn out to be an onerous exercise for many businesses, SARS said in the white paper the investment could work out for them, as it will automate a bureaucratic process.
“At the core is an intelligent case management system that supports voluntary compliance through automating routine tasks, harnessing big data, deploying Agentic AI, and improving taxpayer service and productivity. This includes shifting from declaration‑based to real‑time risk profiling and case selection, embedded in an entity‑based compliance model within the digital platform.”
SARS said it will roll out the system in the first half of 2028 and that it will mirror the automated tax assessment system it has already implemented for income tax.
“This modernisation phase focuses on modernising VAT administration, connecting SARS across the value chain to every point of sale — with the goal of eventual auto‑assessment, similar to Personal Income Tax (PIT). It will also include minor taxes. SARS will also partner with the Border Management Authority to modernise Customs & Excise, upgrading both physical and technological infrastructure toward a ‘no‑stop’ experience at Ports of Entry.”
