A central theme in the 2026 Budget Review is the drive to strengthen tax administration through better data analytics, sharper compliance tools, and a renewed effort to pull long‑overlooked taxpayers into the net.
These measures are already producing results. The South African Revenue Service has registered 1.3 million additional taxpayers across various tax types, adding almost R5 billion to state revenue.
SARS’s modernisation push has also exposed a significant pool of high‑income non‑filers. Using enhanced data‑matching capabilities, the agency identified roughly 100 000 individuals earning more than R1 million a year who were not registered for tax.
More than 30 000 of them have now been brought into the tax base, says Sarieka Rautenbach, KPMG partner in global mobility services and employment tax.
“This could only be done due to the technology investment and data-gathering measures SARS have been embarking upon. By thinking smartly about the information, they have been able to identify the people who are not paying their fair share,” she said during a post-Budget webinar.
SARS – through third-party data providers – can detect that someone is earning enough income to be paying tax, yet a tax return has not been filed, nor is any tax being generated from the income.
Rautenbach says the use of artificial intelligence to identify people who should be taxpayers must not be underestimated. SARS can find out a lot about a person’s lifestyle just by following them on social media.
“That could be the start to an old-school lifestyle audit – how does the person live compared to the amount of income they are declaring and paying tax on.”
The VAT modernisation project and the use of AI and data analytics will impact compliance, not necessarily for those who are already compliant but by pulling in those people who might think they are flying under the radar, says Rautenbach.
Debt collection targets
In the Budget Review, National Treasury notes the projected increase in debt collections was not achieved in full. At the end of January this year, the total outstanding tax debt amounted to approximately R646 billion, of which R518bn represents undisputed debt.
SARS aimed to collect at least R95bn by the end of January but only managed to collect R79bn. This is below the initial target and materially below the enhanced target of R120bn for 2025/26.
Mariska Delport, an associate in Cliffe Dekker Hofmeyr’s tax and exchange control practice, says the scale of outstanding tax debt remains significant, particularly in respect of undisputed amounts.
“Undisputed liabilities present fewer procedural barriers to recovery than amounts under objection or appeal,” she adds. However, she also referred to the increase in disputed debt.
Delport emphasised that taxpayers must apply for a suspension of payment if they intend to dispute or are disputing a tax liability. Given the pay-now-argue-later rule in the Tax Administration Act, the lodging of an objection or appeal does not suspend the legal obligation to pay tax.
“Taxpayers engaged in disputes should therefore critically consider the statutory requirements to qualify for a suspension should they wish to request the delay of the payment of the disputed tax debt.”
She said there has also been an increase in deferred payment arrangements. “These arrangements regulate the timing of the debt payment but do not extinguish the underlying tax liability.”
Enhanced capabilities
KPMG’s head of corporate tax, Itumeleng Nkadimeng, says SARS has been using its additional resources (R7bn over the medium term) to enhance its capabilities for revenue collection and enforcement. This has resulted in higher tax compliance.
SARS has upped its game in collecting outstanding debt by appointing about 620 debt collectors and aims to increase its debt collections staff component to 1 500.
During a Budget media session, a SARS official noted the agency received additional funding around June last year and only then started recruiting debt collectors. However, they still had to be trained. Given the rise in tax debt disputes SARS also had to look for different skills that could complement its collection efforts. SARS has been hiring additional legal professionals to pursue civil judgments against taxpayers. This will increase collections.
Audit readiness
According to Nkadimeng, SARS will be using its new tools (AI and data analytics) to identify areas of non-compliance for more targeted audits. These tools will also be used to identify red flags. When there are changes to “routine transactions or “routine disclosures”, particularly on the corporate tax side, AI and data analytics will assist SARS in tracking the deviations better.
She adds that taxpayers should also become familiar with the use of AI and data analytics to ensure audit readiness. “That goes to the quality of your data and the ability of your systems to support audit responses and to support day-to-day compliance requirements.”
Rautenbach complimented SARS on its AI bot. She says it provides good and sound information and can guide taxpayers on what to declare and how to declare it.
“I think by making information around compliance more accessible it will result in better compliance,” she says. “People do not want to struggle to meet their obligations.”
Amanda Visser is a freelance journalist who specialises in tax and has written about trade law, competition law, and regulatory issues.
Disclaimer: The views expressed in this article are those of the writer and are not necessarily shared by Moonstone Information Refinery or its sister companies.
