SARS has opened consultation on a proposed Digital VAT Model that would introduce structured e-invoicing, an Interoperability Framework (IF), near real-time e-reporting and automated VAT assessments.
The South African Revenue Service (SARS) opened public consultation on the SARS Consultation Paper on Value Added Tax (VAT) Modernisation: E-invoicing, Interoperability Framework and E-reporting in August 2026, seeking stakeholder views on plans to modernise VAT administration.
The proposal would shift South Africa’s current retrospective, declaration-based VAT administration towards a digitally enabled system based on structured e-invoicing, interoperability, e-reporting and automated VAT assessments. SARS said the consultation is intended to test key policy choices and designs and gather practical input to support development of the framework.
Digital VAT Model
The proposed system would bring together three main components: e-invoicing, an Interoperability Framework (IF) and e-reporting. Together, these would form a Decentralised Continuous Transaction Control and Exchange (DCTCE) ecosystem, referred to as the Digital VAT Model.
An e-Invoice would be a structured, machine-readable electronic document based on a prescribed data model. It would not be a PDF, scanned image or emailed file. The e-Invoice would become the primary evidence for output VAT on the supplier side and input VAT deductions on the recipient side.
Technical standards are expected to align with specifications including EN16931 CIUS, UN/CEFACT Cross-Industry Invoice and Peppol PINT BIS. Prescribed regulations and specifications would cover data elements relevant to areas including zero rating, deemed supplies and apportionment.
Interoperability Framework
The Interoperability Framework (IF) would connect businesses and SARS through a network of accredited service providers known as Access Points.
The proposed five-corner structure would involve the supplier, the supplier’s Access Point, the buyer’s Access Point, the buyer and the SARS Access Point. Suppliers would issue structured e-Invoices through compatible accounting software and submit them through accredited Access Point providers.
The supplier’s Access Point would validate and clear the e-Invoice against prescribed technical standards and VAT regulations. Cleared invoices would be transmitted to the buyer’s Access Point and the SARS Access Point, while rejected invoices would be returned to the supplier for correction.
The buyer’s Access Point would receive the cleared e-Invoice, perform decentralised validation and transmit it to the buyer. The buyer would then indicate its accounting VAT status, including whether the VAT is fully, partially or not claimed.
The SARS Access Point would receive VAT transaction data from both sides through duplex clearance. This would provide SARS with transaction data to pre-fill VAT returns and support the eventual introduction of automated VAT assessment, while retaining the self-assessment principle by allowing taxpayers to review, edit or confirm pre-filled returns.
e-Reporting
Under the proposed e-reporting system, VAT transaction data would be transmitted electronically to SARS just before, during or shortly after invoice exchange.
The system would combine e-invoicing data with relevant third-party accounting information to support continuous, exception-based monitoring. SARS would therefore have greater transactional visibility than under the existing system, where verification generally takes place after VAT returns have been submitted.
The proposed model is intended to reduce reliance on manual processes, unstructured invoice data and retrospective reconciliation, while supporting earlier identification of compliance issues.
Implementation roadmap
SARS has proposed five implementation phases beginning with preparation in 2026/2027.
The preparation phase is expected to run for about 12 months and cover research, consultation, readiness assessments and the publication of draft VAT regulations. The solution development phase, planned for 2027/2028, would focus on technical design, standards, governance and the promulgation of VAT regulations.
A validation phase of about six months is planned for 2028/2029, involving controlled testing with voluntary participants. This would be followed by a pilot phase of approximately six months during 2029/2030.
The phased rollout phase would begin during the 2030 calendar year and continue for approximately 36 months. The proposed sequence includes Large Taxpayers and Businesses (B2B), Business-to-Government (B2G), Micro, Small and Medium Enterprises (MSMEs – B2B) and Business-to-Consumer (B2C) transactions.
Impact on businesses
Implementation would require changes to IT systems, finance and compliance processes and organisational arrangements. Taxpayers would need to upgrade or replace legacy accounting and ERP systems to support the new e-Invoicing standards and connect securely with selected Access Point providers.
Finance and compliance functions would move from retrospective VAT reconciliation towards continuous transaction monitoring and real-time exception management.
Large businesses are expected to be better positioned for early adoption, while MSMEs may require simplified digital tools, low-cost or subsidised services and additional onboarding support. Government and public-sector entities would also need to upgrade procurement and financial systems to receive and process e-Invoices.
SARS identified implementation costs, digital literacy among smaller taxpayers, business disruption, regulatory complexity, system integration, data security and scalability as key challenges. It plans to address these through policy consultation, cost planning, training and data-security measures.
The consultation will close on 16 October 2026.
