As South Africa seeks to restore fiscal confidence, the South African Revenue Service (SARS) is seeking to leverage the new era of digitised tax administration to strengthen compliance and convert constraints into sustained fiscal relief.

During this year’s Tax Indaba, on September 14, SARS commissioner Dr Johnstone Makhubu explored the evolving role of SARS as the tax administration enters a new era of digitalisation, data-driven compliance and technological innovation and how these developments can help strengthen compliance, improve revenue collection and support South Africa's broader fiscal objectives.

During his keynote address, Makhubu highlighted some of the main challenges confronting the tax administration, including the digital transformation of tax administrations, an ageing workforce, combatting crime and the underfunding of tax administration.

He said South Africa’s tax system was fundamentally sound, noting that the system remained resilient, though institutional health could not be taken for granted.

He explained that the tax system was stable and healthy but that the future success depended on four key priorities.

These included developing capable and ethical people in the organisation; accelerating modernisation; securing sustainable funding; and building stronger relationships with stakeholders.

Makhubu noted that the global, domestic and institutional environment confronting SARS was more complex, volatile and demanding than at any point in recent history, noting that these realities raised the stakes for leadership, execution and trust.

Hence, he emphasised the importance of accelerating modernisation while “getting the basics right” and enabling sustainable fiscal outcomes for South Africa.

“Any organisation that is not embracing modernisation is going to be outdated very soon.

“We want to future proof our organisation as we move forward, but we want to get the basics right because we are convinced that strengthening institutional capability and execution excellence becomes important. That's why we need to go back to the basics,” said Makhubu.

He explained that modernisation was unavoidable as SARS underwent this transition, adding that SARS aimed to prepare its employees to work with AI systems.

“If we don't prepare them now, we are going to find ourselves leaving a lot of employees behind and we want to be able to move forward with them.”

With this in mind, Makhubu said SARS aimed to leverage data, digital platforms and the ethical use of AI while establishing a trusted enterprise data foundation through master data management and government.

He said SARS also aimed to ensure that technology shrank the gap between economic change and institutional response.

He explained that SARS was advancing its ‘modernisation 3.0’ strategy to sustain compliance and revenue performance in a rapidly evolving environment. Specific areas of modernisation included value-added tax modernisation, excise modernisation and customs modernisation and agentification.

He added that SARS also aimed to tackle the illicit economy in line with the National Illicit Economy Disruption Programme.

In terms of getting the basics right, he noted that SARS was focussing on various areas, including leadership, people, service excellence, compliance and revenue and debt management.

Makhubu said the next chapter must be visible in the taxpayer experience.

He reiterated that SARS aimed to invest in the continuous development and ethical conduct of its people; accelerate modernisation around taxpayer and trader needs; strengthen the case for sustainable institutional investment; build more structured and differentiated stakeholder relationships; and translate stakeholder feedback into measurable improvements.

“We have listened and . . . the task is now to convert what we have heard into institutional action as we move forward.”