BUSINESS NEWS - The South African Revenue Service (Sars) is positioning technology, institutional capability, trust and stronger stakeholder partnerships at the centre of its next phase of tax administration.

Sars Commissioner Dr Johnstone Makhubu outlined the organisation's vision during his keynote address at the 13th Annual Tax Indaba in Sandton, where he reaffirmed the ambition of building “A Smart Modern Sars with unquestionable integrity admired by all.”

Speaking under the theme “Sars and the Next Era of Tax Administration”, Makhubu said revenue collection remained Sars's core mandate, but argued that sustainable revenue depended on more than the amount collected.

According to the Commissioner, the effectiveness of the revenue authority must also be measured by how it treats taxpayers, the quality of its services, the way it addresses non-compliance and the confidence it builds among those it serves.

“Revenue sustainability is not only about what is collected, but also how it is collected,” Makhubu said.

Building trust in the tax system

Makhubu's address followed a stakeholder-listening process conducted during his first months as Commissioner, involving taxpayers, tax practitioners, business associations, government stakeholders, international partners and Sars employees.

The engagements highlighted four recurring expectations: fairness, professionalism, responsiveness and meaningful partnership.

While describing South Africa's tax administration system as stable and resilient, Makhubu said Sars could not afford to become complacent.

“Leadership is not about celebrating today's performance, but about identifying tomorrow's risks and acting before they become constraints,” he said.

The Commissioner said Sars needed to prepare for emerging challenges before they became obstacles to the country's fiscal sustainability.

Sars targets the illicit economy

A key part of the organisation's strategy will be tackling the illicit economy, which Sars says undermines legitimate businesses, threatens jobs and weakens economic growth.

Through the whole-of-government approach under the President's National Illicit Economy Disruption Programme, Sars aims to strengthen its ability to disrupt illicit activities, including fraud, tax evasion and cross-border syndicated financial crime.

Technology and coordinated enforcement will play an increasingly important role in identifying and responding to these activities.

For legitimate businesses, the approach is intended to support a more level playing field by placing greater pressure on those operating outside the formal tax system.

Modernisation 3.0 brings AI into focus

At the heart of Sars's future plans is Modernisation 3.0, an initiative aimed at developing a more intelligent tax and customs administration powered by data, automation and artificial intelligence.

The programme includes the modernisation of VAT, customs and excise processes, intelligent case management, digital identity capabilities and the use of AI to streamline routine processes and improve service delivery.

Makhubu stressed, however, that the increased use of technology would not mean replacing people.

“The future of tax administration is not people versus technology, but it is people and technology working together to make compliance easier, services faster, and enforcement more precise,” he said.

The intention is to use technology to strengthen the capabilities of Sars employees while making interactions with the revenue authority simpler and more efficient for taxpayers and traders.

Making compliance easier

One of Sars's longer-term ambitions is to make compliance increasingly embedded in ordinary economic activity.

Makhubu said digital systems, trusted data and real-time interactions could help make compliance a natural part of doing business rather than a separate administrative burden.

“Our goal is simple: compliance should become the natural outcome of participating in the economy,” he said.

The approach would allow Sars to focus more of its enforcement resources on taxpayers and businesses that deliberately avoid their obligations, while making it easier for compliant taxpayers to meet theirs.

The strategy comes as Sars seeks to build on improvements in revenue collection, voluntary compliance, taxpayer trust, service delivery and employee engagement achieved in recent years.

A new partnership with tax practitioners

Makhubu also called for a stronger relationship between Sars and the country's tax practitioners.

He said the relationship should move beyond transactions and disputes towards a shared responsibility for protecting the integrity of the tax system and improving the taxpayer experience.

“The relationship between Sars and tax practitioners must evolve beyond transactions and disputes,” he said.

The Commissioner said tax practitioners and Sars had a common interest in strengthening confidence in the tax system and the rule of law.

Sars plans to continue using platforms such as the Tax Indaba to engage stakeholders, understand concerns and exchange ideas on improving tax administration.

A tax system built for the future

Makhubu said the next phase of Sars would need to be visible in the day-to-day experience of taxpayers and traders, particularly through better service, clearer processes, faster resolution of legitimate matters and stronger engagement.

The broader strategy rests on four priorities: building capable and ethical employees, accelerating modernisation, securing sustainable funding and strengthening relationships across the tax ecosystem.

Ultimately, Makhubu said, South Africa's fiscal future would depend on a revenue authority that combines capable people and intelligent systems with public trust and strong partnerships.

“Revenue is our mandate, but trust is our licence to operate,” he said.

The three-day 2026 Tax Indaba, hosted by the South African Institute of Taxation at The Capital on the Park in Sandton, brings together stakeholders from across the tax profession to discuss South Africa's fiscal position, developments in tax administration and the role of technology in creating a future-ready tax system.

This year's event is being held under the theme “From Constraint to Capacity: Turning Fiscal Space into Sustainable Reform.”

‘We bring you the latest Garden Route, Hessequa, Karoo news’