SARS Relief Possible for Taxpayers.
A forthcoming legislative change could offer relief to South African taxpayers, but only under stringent conditions. Under the proposed amendments in the 2025 Draft Tax Administration Laws Amendment Bill (TALAB), individuals and businesses may be allowed to suspend payment on estimated assessments issued by SARS, provided certain criteria are met.
Currently, when SARS issues an estimated assessment — for example, where a taxpayer fails to file or submit complete returns — taxpayers are typically obligated to pay immediately while they dispute or correct the assessment. The proposed amendment to Section 164 of the Tax Administration Act would formalise a pathway to delay that payment while challenges are underway, offering breathing room during disputes.
Another important reform would extend the scope of South Africa’s Voluntary Disclosure Programme (VDP) to cover customs and excise underpayments, which have previously been excluded. Under the new provisions, importers and manufacturers could admit to errors or understated duties, claim relief from penalties, and avoid criminal prosecution — provided the disclosure is voluntary, timely, and complete.
However, there are conditions. If SARS has already initiated an audit, investigation, or enforcement action, relief may be denied. Any omissions or incomplete disclosures could also invalidate the relief, leaving the taxpayer exposed to penalties and prosecution.
Tax practitioners caution that timing and transparency are critical. Taxpayers should act before SARS becomes aware of any discrepancies, as honesty and full disclosure are non-negotiable. Those who delay or attempt partial fixes could face full enforcement, with penalties reinstated.
In summary, the proposed changes provide a potential lifeline for taxpayers facing uncertain assessments or underpayments, but the opportunity will be limited to those who move early, disclose fully, and comply strictly with the programme’s requirements. Should you require professional advice in this regard do not hesitate to contact our offices.
Static VAT Threshold is Placing Administrative Strain on Small Businesses.
South Africa’s VAT registration threshold has remained unchanged at R1 million in annual turnover since 2009. In the intervening years, inflation has eroded the real value of this threshold. If it had been adjusted annually, analysts estimate it would now be closer to R2.1 million.
As a result, more small businesses are required to register for VAT. Crossing the threshold obliges firms to file VAT returns, implement invoicing systems that comply with SARS requirements, and respond to verification requests.
For many small enterprises—particularly sole proprietors, consultants, and service providers—these obligations create additional administrative and compliance costs. In many cases, firms must hire tax practitioners to manage the process, placing pressure on operating margins.
VAT registration also introduces cash flow challenges. Businesses are often required to pay VAT before client payments are received, increasing financial strain. For firms whose customer base consists largely of private individuals, the situation is compounded: they must either increase their prices by the 15% VAT rate or absorb the cost, reducing profitability.
Some businesses attempt to remain below the threshold by structuring operations into separate entities. While this may reduce VAT exposure, it introduces inefficiencies and raises concerns regarding compliance with tax legislation.
Industry stakeholders argue that the static threshold may be limiting small-business growth. The associated compliance burden risks diverting resources away from expansion and job creation. Policymakers face a balance: while broadening the VAT base generates additional revenue, the administrative impact on small businesses may outweigh the fiscal benefits.
The current threshold, unchanged for over a decade, highlights the tension between revenue collection priorities and the policy objective of supporting small-business development.
VAT Modernisation SA: Guiding Businesses Through South Africa’s Real-Time VAT Transition
South Africa is on the path to a real-time VAT reporting system, with full implementation expected by 2028. This will see a shift away from periodic self-reporting toward e-invoicing and direct, automated data transmission to SARS. The reforms will affect how every VAT-registered entity in South Africa issues invoices, reports transactions, and interacts with SARS.
VAT Modernisation SA has been established as a strategic resource to help businesses navigate this transition. The platform offers:
- Plain-language guides and a glossary to explain key terms like real-time reporting, continuous transaction controls (CTC), and structured data formats, helping businesses understand SARS’s evolving expectations
- Insights into SARS’s reforms, including how e-invoicing and system integration will change VAT compliance requirements.
- Preparation tools to help organisations assess their current VAT systems, identify potential gaps, plan for digital transformation, and train staff.
- Global context showing how other countries in Latin America, Europe, and the Middle East have successfully introduced e-invoicing and VAT modernisation.
The platform’s core mission is to prevent lastminute compliance scrambling—akin to past transitions like the implementation of POPIA and VAT itself—by providing timely insights, key considerations, and accessible solutions.
Early preparation can reduce compliance risk, avoid costly last-minute adjustments, and improve operational efficiency. Should you require professional advice in this regard do not hesitate to contact our offices.
Treasury Eyes Foreign Pensions: What It Means for Retirees.
Recent proposals from the National Treasury suggest a major shift in how foreign pensions and retirement benefits are taxed in South Africa. Currently, under Section 10(1)(gC) of the Income Tax Act, lump sums, pensions and annuities from foreign sources tied to past employment are exempt from income tax for South African residents.
However, the 2025 Draft Taxation Laws Amendment Bill seeks to remove that exemption and bring these foreign retirement payouts into the tax net. The government argues that the current regime can lead to “double non-taxation,” especially in cases where treaties give South Africa taxing rights, but the exemption prevents collection.
If enacted, these changes would take effect from 1 March 2026. Many retirees who rely on foreign pensions may see their income eroded by local taxation, a dramatic departure from decades of practice. Critics warn that this reform could have unintended fallout: wealthy retirees may reconsider relocating to South Africa; current expatriates might repatriate or emigrate; and the country could lose a valuable source of consumer spending, property investment, and tax contributions. Furthermore, unlike local retirement funds, foreign pensions were never given South African tax deductions when contributions were made, so taxing withdrawals now may look inequitable.
For those impacted, early planning is now crucial.
