SARS Highlights Key Tax Updates for Small Businesses.
SARS has released the August 2026 edition of its SMME Connect newsletter, highlighting a number of important tax compliance issues and recent changes affecting small and medium-sized businesses.
A key update is the expanded Turnover Tax regime. From 1 April 2026, the annual turnover threshold for qualifying micro-businesses increased from R1 million to R2.3 million, while the tax-free threshold increased from R500,000 to R600,000. Turnover Tax offers qualifying businesses a simplified tax system that can replace Income Tax, Provisional Tax, Capital Gains Tax and Dividends Tax, potentially reducing both compliance costs and administrative requirements.
SARS has also reminded provisional taxpayers of their payment obligations. Provisional Tax applies to individuals and entities earning income that is not subject to PAYE. The first and second compulsory payments are generally due by the last business day of August and February respectively, with an optional third payment available to reduce any potential shortfall. Accurate estimates are important, as underestimating taxable income or submitting returns late may result in penalties.
Small businesses are also encouraged to keep their Tax Compliance Status up to date. A valid status can be important when applying for contracts, funding and other business opportunities. SARS stresses that all returns should be submitted, outstanding tax debt addressed and supporting information kept current.
Record keeping remains another important compliance requirement. Businesses should generally retain relevant financial and transactional records for at least five years, and longer where an audit or investigation remains unresolved.
Finally, SARS continues to expand its digital support channels while warning taxpayers to remain alert to scams and phishing attempts.
The full August 2026 SMME Connect newsletter is available on the SARS website. Should you require assistance with your business tax obligations, please don’t hesitate to contact our offices.
SARS Moves Closer to a Digital Future for VAT Administration.
The South African Revenue Service (SARS) has taken another significant step towards modernising VAT administration, releasing its VAT Modernisation Consultation Paper for public comment. Published on 7 August 2026, the paper builds on SARS’s 2023 VAT Modernisation Discussion Paper and sets out proposals for a new Digital VAT Model. The aim is to move South Africa away from a system heavily reliant on manual processes and retrospective verification towards one in which VAT compliance is increasingly embedded in businesses’ everyday digital systems.
At the heart of the proposed model are three elements: e-Invoicing, an Interoperability Framework and e-Reporting. Together, these would enable the secure and structured flow of VAT transaction data across the VAT value chain, potentially in near real time.
For compliant VAT vendors, SARS envisages a simpler and more predictable compliance experience, with less administrative effort, improved certainty and faster processing of VAT information. SARS would, in turn, gain improved visibility over transactions, better-quality data and a stronger ability to identify compliance risks and VAT fraud.
The proposals form part of SARS Modernisation 3.0 and support its longer-term ambition for a tax system in which, for most taxpayers, “tax just happens” as part of ordinary business activity.
Importantly, SARS has emphasised that implementation will be phased and consultative. Stakeholder input will inform key decisions around technical design, sequencing, costs, governance, readiness requirements, standards and safeguards.
Businesses therefore have an important opportunity to help shape the future VAT environment.
Written comments on the Consultation Paper must be submitted by 16 October 2026 through the response mechanism outlined by SARS.
The Consultation Paper and further information are available on the SARS VAT Modernisation webpage: https://www.sars.gov.za/types-of-tax/value-added-tax/vat-modernisation/. Should you require assistance in this regard, please don’t hesitate to contact our offices.
South Africa Takes a Step Towards Mandatory Sustainability Reporting.
South Africa has taken an important step towards formalising sustainability-related corporate reporting, with the Companies and Intellectual Property Commission (CIPC) establishing a new National Adoption Readiness Working Group on Sustainability Reporting. The Working Group will consider how South Africa could align its existing corporate reporting framework with the International Sustainability Standards Board’s IFRS S1 and IFRS S2 standards, which are emerging as the global baseline for sustainability and climate-related financial disclosures.
The initiative is significant for South African businesses because it could ultimately pave the way for sustainability reporting requirements to be incorporated into national policy and legislation. The aim is to improve the consistency and comparability of sustainability information, while supporting investor confidence, access to sustainable finance, corporate governance and climate resilience.
The Working Group’s immediate task is to develop a draft National Adoption Roadmap. Its work will consider issues including regulatory alignment, materiality, assurance requirements, industry readiness, skills and capacity, and how any new requirements should be phased in. CIPC has stressed that any future system should be proportionate, evidence-based and digitally enabled.
The process brings together a broad range of organisations, including SAICA, the FSCA, Prudential Authority, Auditor-General, IRBA, National Business Initiative and Minerals Council of South Africa, with the ISSB and Global Reporting Initiative participating as observers. Nine specialist technical clusters have also been established, covering areas such as regulation, assurance, investor needs, preparer readiness, capacity building and digital taxonomy.
The Working Group is expected to operate until 31 March 2027, by which time a final draft roadmap should be submitted to the Department of Trade, Industry and Competition. A formal public consultation process will also follow.
For businesses, the development is an early signal that sustainability and climate-related disclosures are likely to become an increasingly important part of mainstream corporate reporting in South Africa.
Operation Vulindlela Reports Progress Across Seven Key Reform Areas.
Operation Vulindlela’s latest Phase II progress report points to tangible gains across South Africa’s major structural reform priorities, from electricity and rail to water, visas and digital government. In the electricity sector, the new South African Wholesale Electricity Market has begun internal trading with 32 participants, while around 32 GW of new generation projects are now in the grid connection process and expected to connect before 2030. Recent projects reaching commercial operation include 330 MW of wind power in the Eastern Cape and 155 MW in Mpumalanga.
In freight logistics, Rail Access Agreements have been concluded with 11 private train operating companies. These operators could add around 24 million tonnes of freight rail volumes over the medium term, supporting government’s target of 250 million tonnes. Plans are also underway for a leasing company covering roughly 500 locomotives and 17,000 wagons.
Progress in water and sanitation includes a pipeline of approximately R100 billion in water infrastructure projects, of which around R60 billion has already entered implementation. More than 800 water and sanitation projects are currently supported nationally.
On visa reform, electronic travel authorisations can now be processed within 24 hours, with airport processing taking under 60 seconds. The Trusted Tour Operator Scheme has already facilitated visas for more than 77,000 Chinese and Indian tourists, while a R12.5 billion PPP will redevelop six major border posts accounting for over 80% of cross-border flows.
In local government, seven metros are participating in the first phase of reforms covering 12 municipal trading services. Progress on spatial integration and housing, however, remains more preparatory. Government is developing new demand-side and capital subsidy models for affordable housing, working to accelerate the release of strategically located public land, and analysing the scale of the title deeds backlog. While these are important building blocks, implementation is still at an early stage and fewer measurable outcomes have yet emerged than in areas such as electricity or rail.
Meanwhile, passenger rail has recovered 35 of 40 priority corridors. Passenger journeys have risen almost fivefold, from 17 million in 2021/22 to 101 million in 2025/26, while on-time performance improved from 50% to 91%.
Finally, on digital government, more than 203,000 Smart ID and passport applications have been processed through 171 participating bank branches, alongside continued development of digital identity, payments and the MyMzansi platform.
