South Africa’s tax authority, the South African Revenue Service, is demonstrating marked improvements in operational efficiency while ramping up enforcement measures, according to PwC’s 2025 Taxing Times survey of 200 corporate taxpayers conducted between May and July. Respondents from diverse sectors, including 23 per cent from financial services, reported quicker turnaround times for refunds, progress updates and alternative dispute resolutions, alongside a more assertive approach to non-compliance that has heightened scrutiny on late filings and personal liabilities.
This evolution reflects Sars’ aggressive modernisation drive over the past year, incorporating digital tools to narrow the R500 billion annual tax gap. Taxpayers noted earlier interventions, tighter deadlines and a zero-tolerance stance on defaults, with administrative penalties for late submissions becoming more routine. As reported by Business Day, such changes have contributed to a 65 per cent rise in perceived ease of compliance, up from 54 per cent in 2024, as automated systems streamline routine interactions.
Understatement penalties (USPs), imposed post-audit based on taxpayer behaviour—from 10 per cent for substantial errors to up to 200 per cent for evasion—were levied on 30 per cent of participants, a decline from 37 per cent last year. However, perceptions of Sars’ USP application remain contentious: 34 per cent viewed it as aggressive (down from 44 per cent), 34 per cent as moderately so (up from 27 per cent), and just 16 per cent as fair. In debt management, 40 per cent of suspension requests were approved, marginally better than 2024’s 39 per cent, though 19 per cent cited unexplained rejections.
The voluntary disclosure programme (VDP), designed for proactive corrections with penalty relief, saw 29 per cent participation, but rejections climbed due to emerging criteria like refund positions or recent defaults—each cited by 35 per cent of applicants, overtaking traditional concerns over voluntariness. Processing times varied: 28 per cent resolved in one to three months, 37 per cent in three to six, 21 per cent in six to 12, and a concerning 14 per cent exceeding a year. PwC advises meticulous pre-application assessments to navigate these hurdles.
Service delivery enhancements notwithstanding, disputes continue to drag, with procedural fairness and audit clarity lagging. Trust in Sars held steady, with 51 per cent of respondents noting no sentiment shift from 2024’s 46 per cent, underscoring the need for ongoing relationship-building to foster voluntary compliance.
Artificial intelligence is gaining traction in tax administration globally, yet adoption remains nascent. Only 5 per cent of survey participants had engaged Sars’ new AI chatbot, though 70 per cent of those users deemed it helpful. According to MyBroadband, low utilisation may stem from awareness gaps, trust issues or a preference for human channels, but as Sars integrates more AI for risk profiling and query resolution, it could further accelerate efficiencies while addressing the R1.2 trillion informal economy’s evasion challenges. Overall, the survey paints a picture of a more responsive yet formidable Sars, balancing modernisation with robust deterrence to sustain revenue amid economic pressures.