South Africa sets out roadmap for digital VAT model by 2030

South Africa is taking a major step towards modernising VAT compliance. The South African Revenue Service (SARS) has published a consultation paper outlining its proposed Digital VAT Model, with voluntary adoption expected before a later mandatory rollout.

The new model is designed to embed VAT compliance into everyday business processes through the secure and continuous exchange of transactional data. It will operate through an eInvoicing Interoperability Framework (IF) and an eReporting ecosystem, enabling near real-time reporting and validation of VAT transactions.

The proposed model introduces eInvoicing and eReporting through an interoperable framework.

What will change for businesses?

The Digital VAT Model will require businesses to move towards more automated and structured VAT processes. Key changes include:

• The use of digital files
• Submission of disaggregated digital transaction data
• Adoption of a structured digital data schema
• Electronic matching and clearance of invoices
• Digital real-time reporting
• Pre-population and auto-filling of VAT return fields
• Reduced preparation time for VAT calculations
• Near real-time validation of transactions
• Digital signature authentication of electronic invoices

The overall objective is to improve the accuracy and efficiency of VAT reporting while supporting faster data exchange between taxpayers and SARS.

How the five-corner model will work

SARS proposes a decentralised five-corner Continuous Transactions Controls (CTC) framework for invoice exchange, validation and reporting.

Corner 1 (C1): Supplier/issuer

The supplier generates an eInvoice through its accounting software in a digital format.

The supplier must:

• Select and contract with an accredited IF service provider
• Submit eInvoices digitally in near real-time for validation and clearance through the framework

Corner 2 (C2): Access point for the supplier

Corner 2 is a certified service provider accredited by the Network Authority.

Its responsibilities include:

• Contracting with the supplier
• Performing decentralised validation and clearance checks
• Transmitting validated e-invoices to the recipient’s access point and to SARS through the IF network

Corner 3 (C3): Access point for the buyer

Corner 3 is also a certified service provider accredited by the Network Authority.

It must:

• Contract with the recipient
• Receive e-invoices from Corner 2
• Perform validation checks on behalf of the buyer
• Send validated e-invoices to the buyer and SARS in near real-time
• Confirm successful validation back to Corner 2

Corner 4 (C4): Buyer/recipient

The buyer must appoint and contract with an accredited IF service provider operating as Corner 3.

The buyer:

• Receives cleared einvoices
• Processes invoices automatically within its accounting systems
• Confirms receipt and VAT treatment back to Corner 3

Corner 3 then sends the invoice and VAT status information to SARS.

Corner 5 (C5): Tax authority access point

Corner 5 is the service provider appointed on behalf of SARS.

It receives VAT transaction data from both supplier and recipient channels, providing SARS with access to transactional information from participating taxpayers.

According to the consultation paper, this data will support the pre-filling of VAT returns. Taxpayers will still be able to review, confirm or amend pre-filled information, preserving South Africa’s self-assessment principle.

eInvoice format

eInvoices must comply with a certain standard, such as:

• EN16931 CIUS
• UN/CEFACT Cross-Industry Invoice
• Peppol PINT BIS

South Africa’s implementation timeline

SARS plans to introduce the Digital VAT Model through a phased programme running to 2030 and beyond.

Phase 1: Preparation (2026 to 2027)

The first phase focuses on research, analysis and stakeholder consultation.

Key activities include:

• Engagement with industry bodies, service providers and software vendors
• Publication of draft VAT regulations
• This consultation phase is expected to run for approximately 12 months.

The deadline for consultation responses is 16 October 2026.

Phase 2: Solution development (2027 to 2028)

During this phase, SARS will establish the technical standards, operating models and specifications needed for:

• Connectivity
• Interoperability
• Data exchange

The VAT regulations are also expected to be formally enacted during this period.

Phase 2 is expected to last approximately 12 months.

Phase 3: Validation and testing (2028 to 2029)

This phase will involve quality assurance testing in a controlled environment with voluntary participants before deployment.

The validation programme is expected to run for approximately six months.

Phase 4: Pilot programme (2029 to 2030)

SARS will conduct a pilot with voluntary participants from priority sectors in a production-like environment.

The aim is to test live operations and confirm end-to-end readiness before broader implementation.

This phase is expected to last approximately six months.

Phase 5: Implementation (from 2030)

The final phase introduces the Digital VAT Model in stages. Adoption will be guided by factors including:

• Regulatory mandates
• Business turnover thresholds
• Transaction volumes
• Industry readiness
• Sector-specific considerations
• High-risk industry classifications

Large taxpayers are expected to have the opportunity to adopt the system voluntarily before mandatory requirements are introduced. Voluntary participation will also be available to businesses of all sizes.

Implementation is expected to begin during the 2030 calendar year and continue over approximately 36 months across four stages:

• Phase Five A: Large taxpayers and B2B transactions
• Phase Five B: B2G transactions
• Phase Five C: Micro, small and medium-sized enterprises operating in B2B transactions
• Phase Five D: B2C transactions

What businesses should do now

While implementation remains several years away, the publication of the consultation paper marks the start of South Africa’s transition towards digital VAT reporting. Businesses operating in South Africa should monitor developments closely, particularly the proposed VAT regulations and technical requirements that are expected to emerge during the preparation and solution development phases.

For organisations with high transaction volumes, early engagement with eInvoicing and digital reporting processes may help ease the transition as SARS progresses towards its 2030 rollout roadmap.

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