Source: VAT, Christo Theron, November 2026. Available on Webinar-on-Demand: VAT Modernisation: Preparing for e-Invoicing and the SARS Digital VAT Model

SARS recently issued a consultation paper on VAT modernisation providing a five year window into managing VAT in the future. We can either regard this as a threat or embrace the technology that would support it and the opportunities that it presents. What is beyond dispute though is that the future is almost here!

Introduction

Legislation dealing with e-invoicing has already been introduced into the legislation last year. It came in the form of introducing definitions in the VAT Act of e-invoice, e-debit note and e-credit note.

The legislative changes commenced the process of laying the foundation for significant structural re-engineering of processing of VAT in the future.

The SARS Consultation Paper on VAT Modernisation: E-invoicing, Interoperability Framework and E-reporting issued in August 2026 reflects how far the thought processes have already evolved.

What is this About?

In short, the end game is that if you process an invoice, debit or credit note on your accounting system, the invoice, debit or credit note will be cleared through a clearing house (referred to as service providers to be appointed by SARS). The purpose of the clearing house will be to ensure that your invoice, debit or credit note complies with all statutory requirements. If it doesn’t, it will be sent back to you.

Once it is approved, you will be able to process the document on your accounting system and the document will be sent as a VAT compliant document to the third-party. The document will also be sent to SARS who will update your records and record either an output or input tax entry in your VAT account with SARS.

At the end of each tax period (if tax periods still exist) you will get a VAT return which you can either accept or amend.

Sounds like something out of this world? Well it is not! It is already being done successfully in a number of countries.

What is the Process?

The initial planning is for full implementation to be done over a period of five years. Approximately one year has been allocated to each phase. If regard is had to the level of work involved, this is highly ambitious.

What About Small Businesses?

The rollout will initially only be done for major corporate businesses. There will come a time though that all businesses will be required to participate in the process if they want to be registered as VAT vendors.

What About Costs?

Let there be no illusion about the fact that the development and implementation costs will be significant. At the moment, there is no indication that taxpayers will be granted any special benefits or relief to assist with the development and implementation costs.

Conclusion

While you may consider five years to be in the distant future (or more likely 10) years), nobody can afford to sit on its laurels and wait and see. Advanced planning is essential if you do not want to be found wanting when the inevitable happens.