The South African Revenue Service (SARS) wants VAT invoices to flow to it in near real time, and it is asking businesses for comment by 16 October 2026. The proposal, called the Digital VAT Model, would eventually cover every VAT vendor. Small businesses are scheduled to come last, from around 2030, according to the consultation paper.
What is being proposed
The model has three parts: e-invoicing, an interoperability framework and e-reporting. In SARS’s media release of 17 August, these are described as enabling the secure, structured and near real time flow of VAT transaction data across the VAT value chain. Commissioner Dr Johnstone Makhubu said it would move the system “from a system that is still too dependent on manual processes and retrospective verification” to one where VAT compliance becomes part of the systems businesses already use every day.
SARS says the model would give it clearer visibility over VAT transactions, stronger risk-based oversight and a better ability to detect fraud and narrow the VAT compliance gap. For vendors, it promises lower administrative effort and faster handling of VAT information. The paper points to Mexico, which processes approximately 10 billion e-invoices a year, and says Mexico and Chile reduced their VAT gap by 50 percent. Brazil has over 2.1 million businesses issuing e-invoices.
The timeline is long
Nothing changes for a vendor this year. The paper lays out five phases:
- Phase 1, preparation: about 12 months from 2026/27, including draft VAT regulations.
- Phase 2, solution development: about 12 months in 2027/28, including promulgation of the regulations.
- Phase 3, validation: about six months in 2028/29 with voluntary participants.
- Phase 4, pilot: about six months in 2029/30.
- Phase 5, phased implementation: expected to start during the 2030 calendar year and run for approximately 36 months.
Within the last phase, large taxpayers come first, and the paper says they are expected to adopt voluntarily at first, with mandatory adoption introduced later. Business-to-government follows, then micro, small and medium enterprises, then business-to-consumer transactions. For the small business phase, the paper says adoption “will be progressive over several years” because infrastructure capability varies. It says the order may change, and that implementation is guided by mandates and turnover thresholds. The paper does not put a rand figure on those thresholds.
What SARS expects of small firms
The paper is direct about what changes. It says small businesses “will need to gradually move away from paper-based, spreadsheets or emailed PDF invoices, to data driven digital invoicing and exchange, by adopting accounting software or service provider solutions.” It adds that service-provider portals or simplified digital tools may provide a practical transition path, and that SARS plans guidance, education and support channels for this group. Voluntary participation is open to any sector or size of business.
That is the part of the paper an owner running the books in a spreadsheet should read. The system it describes depends on structured invoice data being created and exchanged at the moment of sale, not assembled at month end.
Moneyweb covered the release when it came out, and noted that SARS has asked impacted and interested stakeholders to review the paper and submit written comments by 16 October.
How to comment
Feedback is due by 16 October 2026 through the response mechanism in the paper, which is a survey link printed in the document. Comments do not have to be technical. SARS has said it wants practical, evidence-based input on readiness, costs and risks. A business that knows what its invoicing software can and cannot export, or what a paid service provider would add to its monthly costs, has the type of evidence the paper asks for.
The consultation follows SARS’s public pledge on how it wants to deal with taxpayers. Makhubu has promised relationship-focused tax administration. Fraudsters are also copying its communications, as our report on eFiling scams aimed at small businesses shows. Compliance sits alongside a heavy load already, with the average salary facing a 48% effective tax burden.
Government customers and sector exceptions
Two other parts of the paper can matter to a small supplier. Phase 5b would require government entities to receive e-invoices for procurement, which SARS says would improve visibility, control and transparency, and it may be prioritised alongside the large business phase. A business that invoices state customers could therefore meet e-invoicing earlier than its size alone would suggest. The paper also says the order of implementation may change according to ease of adoption, risk of compliance and VAT gap indications, and that sector-specific exceptions and high-risk sectors will be considered. Which sectors fall into those groups has not been decided, which is another reason to comment.
