SARS Unveils “Modernisation 3.0” to Give South Africans a Digital Tax Identity
The South African Revenue Service (SARS) has rolled out a bold new phase of its technology push, unveiling “Modernisation 3.0”—a plan aimed at reshaping how taxpayers interact with the tax authority. At the heart of the overhaul is a single digital identity for every taxpayer, supported by biometric checks and two-factor authentication, designed to strengthen security while making tax processes faster and easier.
SARS confirmed the programme alongside its latest performance update, saying it collected R2.01-trillion in net revenue for the 2025/2026 financial year. The figure marks the first time SARS has pushed beyond the R2-trillion threshold, with 8.4% year-on-year growth—outpacing nominal GDP growth of 5.4%.
In practical terms, Modernisation 3.0 focuses on replacing fragmented touchpoints with a more unified system. Instead of needing to contact SARS repeatedly for routine tasks, taxpayers and authorised representatives will receive a unique authenticated digital identity that consolidates their records.
Modernisation 3.0 and the new SARS digital identity for every taxpayer
Once fully implemented, SARS says taxpayers will be able to access a single view of their accounts through the new identity framework. This includes the ability to update personal status, view account details, and make payments without having to engage SARS directly for every step.
SARS positions the approach as part of a larger shift toward making tax administration more self-service. The goal is to reduce friction for compliant taxpayers while directing effort and resources toward higher-risk cases and areas where enforcement is most needed.
Another key element is the programme’s ambition to lean more heavily on automation. SARS plans to deploy artificial intelligence to support compliance processes, including an intelligent case management system that can handle routine work more efficiently.
Notably, SARS referred to the use of “agentic AI”. In simple terms, this signals a move beyond AI that only answers questions. Agentic systems are designed to take multi-step actions toward a goal, meaning the software could help drive processes such as risk identification and case progression with less manual intervention.
SARS also tied the digital identity rollout to payment reforms. A new instant payment system, to be developed in collaboration with the South African Reserve Bank, is expected to enable quicker transactions and gradually reduce reliance on cash. The idea aligns with the central bank’s wider push toward digitising payments, including its role in instant payment infrastructure such as PayShap.
The programme isn’t limited to income tax interactions. SARS says it is also targeting the VAT system, including plans to allow automatic assessment of VAT returns. That would be a major shift for businesses, potentially reducing the need for manual submissions or constant follow-ups when returns can be assessed automatically based on available information.
On trade and customs, Modernisation 3.0 includes support for a “no-stop border-post concept”. The phrase points to streamlined coordination across government departments, aiming to keep goods moving with fewer interruptions at the border—something businesses have long pushed for.
What SARS says about performance and reducing compliance risks
SARS’ latest revenue update adds momentum to the modernisation roadmap. The agency said its collections reflect a continued upward trend over time, supported by improvements in compliance and enforcement.
It also offered figures related to efforts to prevent revenue leakage. During the year, SARS estimates it prevented around R75-billion in potential loss through initiatives such as syndicate-crime investigations, investigative audits, and verification processes powered by data science.
Looking at recoveries and secured amounts linked to identifiable compliance activity, SARS reported a preliminary total of R316.4-billion in 2025/2026. This included R164.6-billion in cash collections and R151.8-billion in leakage protection.
SARS further estimates that the illicit economy continues to cost the fiscus more than R100-billion per year, citing risks such as smuggling, customs fraud, counterfeit trade, and organised tax crime. Modernisation 3.0, with its risk-driven case handling and AI-enabled monitoring, is clearly aimed at tightening the net around those activities.
Commissioner Edward Kieswetter linked the broader strategy to SARS’ existing auto-assessment capability. He described the results as moving toward a future where “tax just happens”—an environment where compliant taxpayers experience fewer disruptions because parts of the process run automatically.
SARS noted that in the most recent filing season, more than six million taxpayers received automatic assessments. Importantly, SARS said this required no action from taxpayers if they were satisfied with the outcome, reinforcing the practical value of automation for the majority of people who file correctly.
SARS also said its revenue growth has been steady, with collections rising at a compound annual growth rate of 5.8% over seven years. It reported that the tax-to-GDP ratio reached 25.9%, and said the latest results came in R24.7-billion higher than what was estimated in Finance Minister Enoch Godongwana’s 2025 budget speech.
That surplus, SARS said, helped the minister avoid an additional VAT increase, underlining how improved collections can ripple into broader fiscal decisions.
As SARS rolls Modernisation 3.0 forward, the big question will be how quickly and smoothly the new systems reach taxpayers in practice—especially the digital identity, automated VAT assessments, and instant payments. If implemented well, SARS is betting that security, automation, and faster services can go together, while shifting human effort toward the highest-risk cases and reducing unnecessary friction for compliant taxpayers.