Sars has published the long-awaited consultation document on VAT modernization, which presents a pentagonal model for electronic invoicing. This model is designed to pre-fill VAT declarations and ultimately automate VAT assessment.
Sars has published the long-awaited consultation document on VAT modernization, which presents a pentagonal model for electronic invoicing. This model is designed to pre-fill VAT declarations and ultimately automate VAT assessment.
One aspect that may surprise many companies is the timeline: according to the roadmap presented, no action is required from anyone until the 2030s.
The document outlines five stages of project implementation:
Thus, the full launch is planned for around 2033. Large enterprises will begin participating voluntarily before any mandatory requirements are introduced. Government bodies may join them, followed by small and medium-sized enterprises (SMMEs), and finally, business-to-consumer transactions.
The architecture represents a pentagonal model of Decentralized Continuous Control and Transaction Exchange. The supplier generates a structured, machine-readable invoice from its accounting or ERP system and sends it to an accredited access point, which performs verification and approval. This access point forwards the invoice to the buyer's access point, where it undergoes secondary validation before being passed to the buyer. Both access points report the approved invoice to a fifth party—the service provider acting on behalf of Sars.
The electronic invoice within this definition is not a PDF or a scanned document. It must contain standardized data elements in a prescribed format, considering standards such as EN16931 CIUS, UN/CEFACT Cross-Industry Invoice, and Peppol PINT BIS. The network authority will accredit service providers and ensure compliance with the rules.
The ultimate goal is automation. Sars intends to use transactional data to pre-fill VAT declarations and eventually for automated tax liability assessment, while taxpayers can confirm or modify the received result, maintaining the principle of self-assessment. This approach is similar to what is already applied to personal income tax, where AI-based compliance systems reconcile bank statements, VAT returns, and CIPC records under the Modernization 3.0 program announced in April.
Until 2026, electronic invoicing service providers and tax consulting firms repeatedly indicated full operational readiness for 2028, anticipating implementation in 2026 or 2027. Most considered these dates tentative and dependent on yet-to-be-written regulations. Sars' own document now sets quality control testing for 2028/2029, with mandatory adoption later. In other words, the roadmap should be read before signing a software contract offered with a '2028 urgency'.
However, this is no reason to ignore the document. Large payers will require ERP and accounting systems capable of generating and receiving structured invoices, contracts with accredited access points, and financial processes rebuilt around continuous verification rather than monthly reconciliation. These are multi-year projects.
Three questions remain open:
There is one important condition applicable to all the above. The document contains a disclaimer stating that its content reflects Sars' current understanding of the proposed structure and may be adjusted after receiving feedback from stakeholders and further analysis. The specified dates are a plan, not a commitment, and consultation may change them in any direction.
Sars cites international precedents to demonstrate the benefits, referencing Mexico and Chile, which reduced their VAT deficit, Mexico's processing of about 10 billion electronic invoices annually, and Italy's centralized platform. France, like South Africa, chose a decentralized pentagonal model instead of a single centralized platform.
The South African Revenue Service (SARS) has instructed schools registered as VAT vendors to formally apply for the cancellation of their VAT registration.
These instructions follow changes to how schools are treated regarding VAT, which became effective on January 1, 2026. Under the South African Schools Act, all services provided by schools are now exempt from VAT, unless the school engages in specific qualifying welfare activities.
Consequently, starting from January 2026, schools are prohibited from charging VAT on these supplies and cannot claim input tax deductions for associated expenditures.
The revenue service emphasized that the deregistration procedure is not automatic; affected schools must actively apply for the cancellation. They are required to fill out the VAT123e – Application for the cancellation of registration form and specify the reason as: “All enterprise activities have ceased on 31 December 2025”.
This completed form must then be sent via email to contactus@sars.gov.za with the subject line: VAT deregistration – Schools. Alternatively, schools have the option to schedule a virtual appointment through the SARS eBooking system, selecting “Other” as the reason category and “VAT and PAYE registration/deregistration” for the appointment reason.
Furthermore, SARS noted that if any exit VAT is due, schools can submit a request for payment arrangements alongside the VAT123e form. The VAT registration will only be canceled after this exit VAT has been declared and paid, or once the school adheres to the agreed-upon payment plan with SARS.
For those schools that wish to maintain their status as VAT vendors specifically for qualifying welfare activities, they must secure written confirmation from the Commissioner in the form of a ruling.
