The South African Revenue Service (Sars) has recently achieved a significant milestone by surpassing R2-trillion in net revenue collection for the 2025/26 fiscal year. This accomplishment marks the highest revenue collected in the country’s democratic era and highlights Sars’s ongoing commitment to effective tax administration, including enhanced focus on enforcing sanctions for non-compliance.

Despite facing challenges such as a sluggish domestic economy, geopolitical tensions, global supply-chain disruptions and quite notably, a growing illicit economy, Sars has maintained and even improved voluntary compliance and facilitated legitimate trade, contributing to overall fiscal health.

The revised revenue estimate for 2025/26 required an 8.2% year-on-year revenue growth, equating to R151.7-billion. Sars not only met but exceeded these expectations, showcasing its resilience.

Significant contributions from major tax categories, including domestic Value-Added Tax and Provisional tax collections on Corporate Income Tax, led to revenue surpluses by the end of March 2026. 

Sars’ Key Compliance Drivers

Commissioner Kieswetter’s strong stance on the eradication of non-compliance is echoed in his sentiment on the illicit economy’s growth, as his tenure as Commissioner of Sars 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.”

In ensuring non-compliance is hard and costly, some of Sars’ key compliance drivers for the fiscal year are:

• 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 to safeguard the fiscus.

Echoing its strategic objective of making non-compliance hard and costly, interventions from Sars’ Compliance Programme generated a whopping R316.39-billion in compliance revenue, solidifying the success of these initiatives by yielding a R12.4-billion year-on-year growth!

With Sars' enhanced non-compliance detection capabilities and a sharp focus on both past and future non-compliance, correct tax and legal guidance has never been more critical. The most prudent approach to be taken, is to heed Sars’ warning that non-compliance will be both hard and costly for the offending taxpayer, with the Tax Administration Act offering up a laundry list of criminal offences for tax non-compliance.

Sars Modernisation 3.0 – The Age of Artificial Intelligence

In addition to revenue achievements, Sars recently announced its Modernisation 3.0 initiative, which aims to enhance taxpayer services and streamline operations through innovative digital technologies. This program will introduce a Unique Digital Identity for taxpayers, integrating biometric and two-factor authentication to secure interactions with Sars.

Sars have been clear that they have, and will, take full advantage of technological advancements, including AI, data science, and machine learning algorithms, to counter criminality and non-compliance.

These data driven insights serve to inform Sars of all transactional records pertaining to specific taxpayers, and using AI, the “manhours”, and concomitantly room for error, is significantly reduced.

An entire team is no longer needed to extrapolate these records into strong legal cases for non-compliance, but rather tech-savvy individuals co-existing with AI. This collaborative approach enables Sars to gain access to a comprehensive dataset, facilitating more robust evaluations of taxpayers' financial activities.

These developments signal a need for heightened diligence in tax record keeping and reporting, with Sars clear in its mandate to collect revenue and eradicate non-compliance by whatever means necessary!

Rise of the Machines = Eradication of Non-Compliance

Sars’ modern debt‑collection approach is no longer a loosely followed process, but rather finely tuned, through “applying technology, machine-learning algorithms, agentic AI, and sophisticated data science to improve taxpayers’ and traders’ compliance and improve service experience, where the “best service is no service at all” and “tax just happens”, as witnessed by more than 6 million taxpayers last year who were auto-assessed.”

Now is not the time to take risks. Sars’ approach clearly shows we are dealing with a competent revenue authority, so why risk it when compliance is evidently the preferred way forward, which Sars is willing and ready to assist all taxpayers with.

As a rule of thumb, all correspondence received from Sars should be holistically addressed by a strong multi-faceted tax, legal, and financial team – the “A-Team”. In instances of non-compliance with tax laws, legal professional privilege is a must, especially where Sars have suspicion of, or have already detected current/historic non-compliance, or “risk(s)”. 

This will not only serve in safeguarding you or your clients against being prisoners of war but also allow for the correct legal stopper to be put in place preventing Sars from implementing aggressive collection measures. As compliance specialists, enlisting your correct A-Team ensures taxpayers and their astute practitioners will be correctly advised on the most appropriate solution to ensure full tax compliance.

Written by Jashwin Baijoo, Partner and Head of Strategic Engagement & Compliance at Tax Consulting SA