🔥 Trending South Africa's SARS Introduces New VAT System: What You Need to Know

The South African Revenue Service (SARS) is implementing significant changes to the Value-Added Tax (VAT) system in South Africa, primarily driven by a modernisation project aimed at enhancing efficiency, transparency, and compliance ¹⁹. These changes encompass a move towards digital administration, adjustments to VAT thresholds, and new rules for imported goods.

SARS VAT Modernisation Project

SARS is rolling out a comprehensive VAT Modernisation Project, which is transforming the way VAT is administered in the country ¹. The core of this project involves a shift to a digitally driven system, with a strong emphasis on real-time data and e-invoicing ¹⁹.

Key Aspects of the Modernisation Project:

• Real-Time Data and E-Invoicing: The project aims to establish a full VAT e-invoicing framework ⁸. South Africa plans to make e-invoicing central to its VAT administration between 2025 and 2030, targeting real-time, transaction-level digital reporting ¹⁰. SARS will implement mandatory e-invoicing, initially focusing on the largest VAT contributors and high-risk sectors ¹⁰. This will involve both batch and API-based submissions ¹⁰.
• Digital Transformation: The goal is a long-term shift towards a digitally driven, transparent, and resilient VAT administration ⁹. This is expected to result in a simpler, more predictable experience for taxpayers, with reduced effort and increased certainty ⁹.
• Public Consultation: SARS has invited public comment on the implementation of this new digital VAT system ⁶⁹.

VAT Rate and Threshold Adjustments

While the standard VAT rate has not seen an increase as part of the modernisation project ¹, there have been adjustments to VAT registration thresholds and an announced, though later agreed upon, increase to the VAT rate.

VAT Rate Increase (Announced and Later Agreed Upon):

• An increase of 0.5 percentage points in VAT was originally announced to take effect on May 1, 2025 ³.
• The Commissioner for SARS, Mr. Edward Kieswetter, welcomed an agreement and court order related to this announced increase ³.

VAT Registration Threshold Changes:

• The Minister's Budget announcement on February 25, 2026, included an increase in VAT registration thresholds ⁷. These changes are subject to Parliament's legislative process ⁷.
• Businesses with annual sales below the new threshold of R2.3 million may apply to cancel their VAT registration, or SARS may initiate the cancellation ⁵.

VAT on Low-Value Imported Goods

SARS has also introduced changes regarding VAT on low-value imported goods.

• Effective Date: From September 1, 2024, VAT was introduced on low-value consignments in addition to the existing 20% flat rate Customs duty ².
• Addressing Loopholes: This change was implemented to close a loophole that previously existed for these types of imports ².

Legislative Amendments

Several amendment acts were promulgated on December 24, 2024, which amend the VAT Act and Regulations ⁴. These changes generally take effect from April 1, 2025, unless otherwise specified ⁴. These include:

• Taxation Laws Amendment Act 42 of 2024 ⁴
• Tax Administration Laws Amendment Act 43 of 2024 ⁴
• Revenue Laws Second Amendment Act ⁴