South Africa is going digital on VAT: what it can learn from the rest of Africa

Completing value-added tax (VAT) returns takes time, and waiting for a refund can tie up money a business needs to pay suppliers or invest.

The South African Revenue Service wants to ease both pressures while making it harder for businesses to under-report VAT.

VAT-registered businesses already file returns electronically, reporting VAT on their sales and purchases.

The revenue service checks supporting invoices after submission when it requests them.

VAT is a tax on most goods and services.

VAT-registered businesses charge it on the goods and services they supply, deduct the VAT they are entitled to claim on purchases, and pay the difference to the tax authority.

In an August 2026 consultation paper , the South African Revenue Service proposed receiving VAT-related transaction details in near real time.

Businesses would issue invoices in a standard digital format, with the relevant details sent automatically to the revenue service.

It could use this information to pre-fill returns for businesses to review and correct, and to identify discrepancies sooner.

Public comments are due by 16 October 2026.

More accurate reporting could help the revenue service collect VAT that businesses have failed to declare.

A study estimated South Africa’s domestic VAT reporting gap at between 35% and 41% across the 2016-2020 tax years.

This measures the difference between VAT declared and the amount that would have been declared under full compliance.

VAT is South Africa’s second-largest source of tax revenue.