The South African Revenue Service (SARS) is exploring the modernization of VAT processes, including the implementation of business-to-business (B2B) e-invoicing and e-reporting to the tax authorities.
This initiative stems from a 2023 consultation wherein SARS considered the feasibility of offering pre-filled VAT returns derived from e-reported data. The potential launch for this new system might occur in 2028 or later.
Adoption of Peppol-Based 5-Corner Real-Time VAT Transaction Reporting
SARS is contemplating the adoption of a 5-corner Peppol model for real-time VAT transaction reporting, which has gained traction as the preferred Continuous Transaction Control (CTC) framework. Countries like France are set to introduce similar systems in 2026, while Belgium has outlined a phased rollout plan from 2026 to 2028.
To inform its strategy, SARS has been actively studying initiatives implemented in several countries, including Italy, Chile, India, Uganda, as well as the European Union’s ViDA framework and the UK’s approaches to digital VAT reporting. SARS is assessing various models for digital and e-invoice reporting and is evaluating options for:
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Pre-approval Models: Continuous Transaction Control (CTC) with mandatory pre-approval of transactions (e.g., Italy).
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Reporting Mechanisms: Centralized versus decentralized reporting models.
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E-Invoicing vs. Post-Invoice Reporting: Determining whether to mandate e-invoicing (as seen in Italy) or utilize post-invoice digital reporting (similar to practices in Spain).
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Scope of Implementation: Considering whether to encompass B2G, B2B, and B2C transactions.
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Phased Implementation and Thresholds: Exploring strategies for deploying the system gradually and establishing potential thresholds for participation.
Consultation Process for Stakeholder Input
As part of its consultation process, SARS invites input from a diverse array of stakeholders, including businesses, vendors, accounting software developers, technology providers, recognized governing bodies, and members of the public. Contributions and comments are welcomed on the following topics:
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Formulation of VAT Data Models: Suggestions on data structures that will be integral to the new system.
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Digital Transmission of VAT Data: Insights related to the technology and processes required for the efficient transmission of VAT data, which is essential for compiling and reporting VAT returns to SARS.
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Modernization of VAT Returns: Recommendations for a modern VAT return format that incorporates disaggregated and enhanced data disclosure fields.
Conclusion
The initiative toward VAT digital reporting and e-invoicing represents a significant shift in South Africa's tax landscape. Stakeholders are encouraged to actively participate in the consultation process to ensure that the eventual implementation is comprehensive, efficient, and effective in meeting the needs of all parties involved.
