More corporate taxpayers say they are finding it easier to comply with their tax obligations, according to the latest PwC Taxing Times Survey.
When asked whether it had become easier or more difficult for their organisation to comply, 65% of survey participants answered “easier” – an improvement of 11% compared with the previous year.
However, 35% of participants “disagreed” or “strongly disagreed”.
PwC said these findings suggest that taxpayers are still finding it difficult to navigate the South African Revenue Service’s systems and processes. It suggested that SARS consider establishing direct communication channels with technical specialists to assist taxpayers in interpreting and applying tax legislation more effectively.
Now in its eighth edition, the Survey was conducted between May and July this year and captures the views of 200 corporate taxpayers drawn from a range of industries.
The stated purpose of the survey is “to provide an annual assessment of corporate taxpayers’ recent interactions with the South African Revenue Service, offering a balanced perspective that highlights both significant achievements and areas where further improvement is needed”.
According to PwC, SARS’s increased digital capacity and system modernisation mean corporate taxpayers are navigating a landscape that is more digital, more assertive, and increasingly complex.
SARS’s more assertive stance towards non-compliant taxpayers is designed to close the tax gap and is evident in its increased use of administrative penalties for late submissions and a growing emphasis on personal liability for outstanding tax debts, PwC said.
Participants in the 2025 Survey reported a noticeable intensification in SARS’s approach – marked by earlier interventions, stricter timelines, and a zero-tolerance posture in cases of default.
PwC said that although improvements are evident in faster turnaround times, improved digital platforms, and greater use of data, respondents still highlight persistent concerns around procedural fairness, consistency, and communication.
When asked whether their trust in SARS has changed over the past 12 months, 51% of participants reported it had not – an increase from 46% in the previous year.
PwC said although this finding was not inherently negative, given that taxpayers’ overall experience has improved, SARS must continue to focus on rebuilding trust to improve taxpayer morality and compliance.
Based on feedback from respondents, the factors that are undermining taxpayer trust in SARS include:
- Digital systems have made it more difficult for taxpayers to obtain support and guidance from a SARS staff member.
- Perceptions that SARS is punitive, particularly in its handling of audits, penalties, and debt collection.
- Long audit processes, unresolved queries, poor co-ordination, and slow response times.
- Concerns about staff knowledge, professionalism, and inconsistent application of tax laws.
- Lack of accountability, particularly regarding political corruption and fair treatment.
- eFiling crashes and poor handling of deregistrations.
- Increased compliance demands on small businesses and non-profit organisations but without adequate support.
An aggregate of 46% of participants indicated that they do not believe that SARS has improved in delivering quality outcomes and performance excellence over the past 12 months. However, this was an improvement on the 48% in 2024.
Verification risk
After a taxpayer files a tax return, SARS typically issues an assessment reflecting the information reported. SARS may subsequently identify potential risks and select the taxpayer for additional verification or audit.
Only 26% of respondents deemed it extremely likely that they would be selected for verification after submitting a corporate income tax return. This was a decrease from 33% in 2024 and a notable decline from 53% in 2023. Additionally, 46% considered it somewhat likely, 22% regarded it as unlikely, and 7% viewed it as extremely unlikely.
PwC said the findings indicate that 72% of respondents anticipate any possibility of being selected for verification, a reduction from 75% in 2024 and 85% in 2023 –suggesting a consistent downward trend in perceived verification risk.
“This shift suggests SARS’s increased utilisation of advanced analytics and automation in the selection process. Nonetheless, the number of verifications remains substantial, prompting concerns regarding the adequacy of resources available to SARS for conducting comprehensive and equitable reviews.”
Respondents reported a noticeable improvement in the turnaround times for verifications (excluding audit cases). Most participants (57%) indicated that verifications are typically completed within one to three months, up from 48% in 2024 and 51% in 2023.
The proportion of participants who experienced verification periods of three to six months was 24%, compared with 27% the previous year. Twelve percent reported verification periods spanning six to 12 months, and 7% noted verification periods that extended beyond 12 months. The percentage of respondents experiencing verifications lasting more than 12 months has declined each year since the first edition of the survey in 2018, PwC said.
Audit turnaround times have also improved. Thirty-one percent of respondents indicated that their audits were finalised within one to three months (up from 28% in 2024 and 19% in 2023).
Audits lasting three to six months rose to 32% from 28% last year, while those lasting six to 12 months fell slightly (20%). Audits of more than 12 months dropped to 17%, down from 23% in 2024 and 24% in 2023, continuing a steady decline since 2019.
Fewer understatement penalties
After an audit, SARS may levy understatement penalties (USPs), with penalty rates depending on taxpayer conduct and ranges from substantial understatement (10%) to intentional tax evasion (150% to 200%).
This year, 30% of participants reported a USP, down from 37% in 2024, while 70% said no penalty was raised (up from 63% in 2024), indicating fewer penalties overall.
In 2025, 34% of participants described SARS’s approach to USPs as aggressive, down from 44% in 2024 and 47% in 2023. Those viewing the approach as moderately aggressive rose to 34%, up from 27% in 2024 and only 6% in 2023.
“Perceptions of fairness remain low, with only 16% of respondents viewing SARS’s classifications as fair – unchanged from previous years – while 16% now consider SARS’s behaviour completely unfair, up from 12% in 2024 but significantly lower than the 34% reported in 2023,” PwC said.
Of participants who felt SARS was aggressive in levying a USP, 59% said SARS cited section 223 of the Tax Administration Act (TAA), but its approach seemed overly forceful. Another 24% agreed that SARS applied USPs under the right behavioural category but questioned its interpretation or the severity of the penalty.
Thirteen percent believed there were no grounds for the penalty, while 4% cited other issues, such as ignoring genuine errors or applying unreasonable penalties until challenged.
Reduced assessments
Section 93 of the TAA permits SARS to reduce or withdraw a final assessment under certain conditions, often to correct taxpayer errors.
Reduced assessments may result from dispute resolutions, settlements, obvious errors or incorrect submissions.
In 2025, 69% of applicants succeeded with reduced assessment requests, the same as in 2024, but up from 62% in 2023.
Notably, only 34% convinced SARS of a “readily apparent undisputed error” in 2025, down from 72% in 2024, indicating stricter standards or weaker supporting evidence.
Payment of VAT refunds
In this year’s Survey, 42% of participants reported their VAT verifications were completed within 21 days, consistent with last year, while the percentage of VAT verifications finalised within three to six months decreased slightly to 41%, down from 48% in 2024.
Verifications that took more than 12 months to complete increased to 8%, compared with 2% last year.
Participants were asked whether their VAT refund was paid within 21 days from submitting a return or receiving a notice from SARS indicating that a VAT verification has been completed. Seventy-five percent reported that SARS released a refund within 21 days – compared with 62% in 2024. The balance reported that SARS either did not pay a refund within 21 days or did so only after follow-up enquiries from taxpayers.
Selection for VAT201 audit
In 2025, 13% of participants (33% in 2024 and 32% in 2023) reported being selected for an audit every time they submitted a VAT201 return, while 31% (8% in 2024 and 28% in 2023) indicated they were selected for an audit whenever the return resulted in a refund.
PwC said there has been a significant increase in participants’ perception that they will be selected for an audit when their VAT201 results in a refund. Compared with 2024, the selection of the “hardly ever” option has substantially increased, while the “never” option slightly increased.
SARS’s automated system selects VAT returns for audit based on a risk assessment process, PwC said. “In our experience, this system applies a combination of criteria and algorithms to identify returns that may require further scrutiny.”
The following metrics are applied:
- The system profiles taxpayers using various risk factors, which may include filing and payment history, industry benchmarks, the value of VAT claimed or payable, and inconsistencies between the VAT return and other data available to SARS.
- Advanced data analytics are used to identify anomalies or patterns that deviate from expected norms. For instance, if a taxpayer’s VAT claim is unusually high or low, or significantly differs from industry averages, the return may be flagged for audit.
- VAT returns are cross-referenced against multiple data sources, including third-party information, import/export records, and historical tax filings. Any discrepancies identified through this process may prompt an audit.
- Beyond risk-based selection, SARS may also randomly select a portion of VAT returns for audit. This element of randomness helps to preserve the system’s unpredictability and ensures that all taxpayers remain subject to potential review.
- Specific system generated flags, such as unusually large refund claims or irregularities in input tax, can automatically initiate a verification process.
