SARS receives additional R4bn to continue modernisation

Budget 2025: The South African Revenue Service (SARS) will receive an additional R4 billion over the medium-term to modernise its operations and enhance taxpayer services.

This is in addition to the R3.5 billion it was allocated at the time of the 2024 Medium-Term Budget Policy Statement, bringing the total allocation of funds to SARS to R7.5 billion.

This came to light during a media briefing held today ahead of finance minister Enoch Godongwana’s budget speech.

Godongwana tabled Budget 2025 at Cape Town City Hall this afternoon, following last month’s historic postponement over the proposed 2% value-added tax spike.

Speaking during a media briefing hosted ahead of the budget speech, the finance minister said after consultative meetings with SARS, National Treasury has decided on an additional R4 billion to the SARS budget over the medium-term expenditure framework (MTEF). “This takes the total budget for SARS over the MTEF to R7.5 billion.”

Responding to a media question on how SARS will spend the R7.5 billion, commissioner Edward Kieswetter said: “In the original allocation – the R3.5 billion over three years – that was R500 000 a year for SARS to continue the modernisation of its systems. Throughout the other years, it was R1 billion each for operationalisation.

“What we’ve agreed with the minister is that SARS has a significant balance sheet. What we mean by balance sheet, it is the debt book that is due to the state and outstanding returns that haven’t been submitted. Against each of the outstanding returns, we can compute a value and where people don’t submit a return, businesses will have to pay taxes.

“In the year that has passed, we’ve had a ring-fenced project of R1 billion – that the minister allocated to us in the previous financial year – and have used that to target the reduction of debt and facilitate a more efficient turnaround time of declarations in terms of which refunds are due. If we don’t do that, it means we will simply pay out the refund without doing declarations.

“It has been quite useful because we have been able to prevent the outflow of impermissible refunds using machine learning algorithms and AI. What we’ve asked the minister is to retain that R1 billion so that we can continue that project, and then give us another R1 billion to double up our efforts on reducing the debt book.

“The R2 billion for this year will be focused on the reduction of the balance sheet items…and the R500 000 for modernisation.

“We really would like to accelerate our modernisation. Otherwise, we cannot go after the illicit economy and a lot of the other financial crimes,” said Kieswetter.

In his speech, Godongwana said by the end of February this year, SARS reported a significant increase in undisputed debt, meaning billions of rands are owed to the state.

“The revenue collector has also detected 156 000 taxpayers who are not registered, or have not filed despite their substantial economic activity.

“I call on all South Africans to comply with the law and support SARS in its endeavour to collect the revenues that enable government to fund and provide critical services. The investments we make today in SARS will allow the collector the time to make improvements.”

SARS has consistently deployed tech-based solutions to help increase compliance levels and yield gains for the fiscus.

The taxman previously revealed that data-driven and automated risk engines that detect non-compliance are yielding results, adding R79 billion to the national fiscus in the 2022/23 financial year.

The tax authority collects over 90% of the revenue required by government to serve the South African population.

In the budget Estimates of National Expenditure (ENE) document, National Treasury highlights the R3.5 billion over the medium-term was focused on leveraging technology, data science and AI to foster efficiency and transparency in tax administration, while combating exploitation by criminal syndicates.

The ENE states that over the past five years, SARS has made “significant” progress in rebuilding and modernising its systems by shifting to online services and automating many of its processes to improve service, detect fraud and enhance compliance.

“In 2025/26, SARS will focus on addressing the tax gap to improve revenue collection. This will be done by improving taxpayer compliance and trade facilitation by leveraging artificial intelligence and data science.

“SARS is deploying technologies to simplify its processes and enhance the single window platform to improve taxpayer and trader service. Adopting scanning technologies and intelligent image analysis will significantly reduce inspection times through ports of entry.

“The traveller declaration system is being modernised to provide digital services to cross-border travellers and state entities, reducing illicit financial flows and other risks.”