Africa-Press – South-Africa. The National Treasury has proposed introducing an e-reporting, also known as e-invoicing, framework into the VAT Act in South Africa.
This proposal is among a raft of changes included in the VAT Modernisation Project, which the Treasury and SARS are in the process of implementing.
The National Treasury and SARS unveiled these proposed changes as part of the release of the 2025 Draft Tax Bills and Draft Regulations for Comment.
One key aim of the publication is to enable the VAT Modernisation Project by changing existing legislation and regulations to allow for the overhaul of SARS’ systems to enhance collection.
The National Treasury said this project forms part of a broader effort to transform tax processes and improve customer service and engagement.
Its key aims are to reduce the VAT gap and streamline tax administration for VAT traders, businesses, and SARS.
PwC’s tax team explained that the most notable proposed amendment is the introduction of an e-reporting, or e-invoicing, framework into the VAT Act.
The firm said no formal framework currently exists for the structured and automatic electronic submission of VAT-related information and/or documents.
SARS started the VAT Modernisation Project in 2023 by publishing a discussion paper, which has now been followed by introducing legislative amendments to support SARS’s digital transformation.
The proposed change introduces new definitions to be added to the VAT Act, including the following –
e-Invoice, e-credit note, and e-debit note, which allow for structured electronic formats for VAT documentation
e-Reporting, which refers to the electronic submission of tax data extracted from the abovementioned documents
An interoperability framework, which broadly means a decentralised exchange network for e-documents
PwC said the framework for the practical implementation of the e-reporting is proposed to be regulated by a regulation to be published by the Minister of Finance.
It appears that this will be implemented by allowing participants to voluntarily opt in and progressively make it compulsory.
There will be further communication around the framework and implementation. The date for its implementation is yet to be determined.
Real-time reporting
Deloitte’s Tax Technology and Indirect Tax Team previously outlined some of the proposals included in SARS’ discussion document on the VAT Modernisation Project.
The major change it identified is likely to be the introduction of real-time VAT reporting and compliance, which would result in significant changes for companies.
It said real-time VAT reporting will fundamentally change how the tax is reported and collected in South Africa.
The revenue service’s investment in digitisation will also significantly increase its ability to access more business information in real time.
This new system requires significant changes for businesses, as tax teams will no longer have the chance to analyse and correct data before filing a return, as SARS will have access to it at the same time as the company.
This makes the quality and governance of tax data more critical than ever before. To avoid significant penalties and increased operational risk, many organisations will need to adapt their processes to this new way of interacting with the tax authority.
The changes also present a challenge for SARS itself, as it will require immense investment in digital capacity and consistent monitoring of VAT invoices.
Despite this, the modernisation is expected to yield tremendous benefits, such as increased tax revenue and a smaller tax gap, all without raising the VAT rate.
Deloitte’s tax team points to Chile as an example of the potential benefits of this kind of modernisation.
After digitising its VAT monitoring systems, Chile was able to systematically reduce its VAT gap by using information gathered from electronic invoicing.
This was first implemented for the largest businesses and then gradually cascaded through their supply chains.
Chile has since developed a range of taxpayer-facing services and internal tools to identify high-risk cases and potential signs of tax avoidance.
For More News And Analysis About South-Africa Follow Africa-Press
