The 2025 Budget Speech, which finally took place on 12 March 2025, confirmed R7.5 billion to be allocated to resourcing of the South African Revenue Service (SARS), aimed at “broadening the tax base and improving administrative efficiency”.
Jashwin Baijoo
Associate Director and Head of Strategic Engagement & Compliance
Translated, this simply means a massive budget boost to recruit skilled resources, and drive the revenue collector’s vision of a smart, modernised SARS. Enhancing capacity to detect non-compliance, and make it both hard and costly, through the use of data driven insights is a firm strategic objective of the tax authority, and those on the wrong side of SARS must beware!
As it stands, SARS has detected a whopping 156 000 taxpayers who, despite engaging in substantial economic activity, are either not registered taxpayers, or have defaulted in filing their tax returns.
In other words, these taxpayers, once on SARS’ radar, will not only face potential criminal sanctions, but also likely a mountain of tax debt, including penalties and interest.
Artificial Intelligence Leveraging Poised to Spell the End for Tax Non-Compliance
Over the last 5 years, SARS has made significant progress in modernising its systems to detect fraud and enhance compliance, whilst also building its tax collection capacity, and a track-record of successful criminal convictions for non-compliant taxpayers.
SARS’ focus for 2025/26 is addressing the “tax gap” to improve revenue collection, being SARS’ primary mandate. As a means to an end, the revenue collector will leverage Artificial Intelligence (AI) and data driven insights, derived from both South African and international sources, to detect any degree of non-compliance and hold the perpetrating taxpayer, and in some instances, “tax aggressive” advisor, accountable.
These data driven insights inform SARS of all transactional records pertaining to specific taxpayers, and using AI, the human resourcing element is significantly reduced in “risk detection” and subsequent compliance-centric actions.
This collaborative approach enables SARS to gain access to a comprehensive dataset, facilitating more robust evaluations of taxpayers’ financial activities.
With SARS’ enhanced non-compliance detection capabilities and a sharp focus on both past and future non-compliance, correct tax and legal guidance has never been more critical. The most prudent approach to be taken, is to heed SARS’ warning that non-compliance will be both hard and costly for the defaulting taxpayers, with the Tax Administration Act, 28 of 2011, enshrining criminalisation of “non-compliance with tax Acts”.
Prudence of Legal Professional Privilege, in the Age of Automation
When you venture into the realm of navigating your complex and high-value SARS Tax Debt, whilst ensuring some level of protection against potential criminal conviction, the integral starting point is ensuring your chosen representative provides you with legal professional privilege on all sensitive information shared.
Where there is a degree of non-compliance, be it an outstanding tax debt, or unfiled tax returns, SARS’ systems tend to indiscriminately issue notices of demand, with the revenue authority trying to cast its collection net as wide as possible.
Often being aggressive in collections, SARS must always be correctly and legally engaged; having an attorney with trial advocacy experience under their belt gives you an undisputed edge in negotiating on the legal papers submitted.
Beyond this, where the correct legal course of action per the TAA is followed, you will not be subjected to funds withdrawn from your bank account, without your consent.
Whilst you may be legally protected, your tax attorney is best complimented with an astute accountant or tax returns specialist, knowing the ins and outs of compliant legal disclosure, whilst an automation expert is recommended enabling seamless data-comparison and discrepancy reporting.
Enlist the “A-Team” – Seasoned Tax and Legal Experts, with Automation Upgrades
When it comes to your tax affairs, and in order to protect yourself from SARS, it remains the best strategy that you always ensure compliance!
Where you find yourself on the wrong side of SARS, there is a first mover advantage in seeking the appropriate strategic compliance guidance. This serves to both, provide you with piece of mind, and also ensures the correct protective steps are taken – call in the compliance cavalry now!
As a rule of thumb, any and all correspondence received from SARS should be legally addressed, as often legal professional privilege is a must in instances of non-compliance. This will not only serve in safeguarding against SARS implementing collection measures or potentially criminal charges, but also being specialists in their own right, taxpayers and advisors will receive correct legal counsel on the most appropriate solution to ensure full tax compliance.
