The South African Revenue Service (SARS) continues to accelerate its modernisation and digitalisation agenda across all tax types. While these advancements aim to improve efficiency and transparency, they have simultaneously introduced heightened compliance risks for taxpayers. Strengthened validation controls, stricter eFiling requirements, and evolving legal interpretations are collectively reshaping the tax landscape.
Recent developments—both operational and judicial—highlight a clear trend: SARS is intensifying its enforcement efforts and adopting a more assertive approach to tax compliance and collection.
Operational Developments and Compliance Focus
1. Enhanced Trust Compliance Measures
A significant compliance shift is evident in SARS’ treatment of trusts. Effective from 4 May 2026, SARS began issuing penalty notices (AP34) to trusts that failed to submit their income tax returns (ITR12T) for the 2024 and 2025 years of assessment. To ensure that the updated ITR12T is aligned and to capture mismatches between trust reporting and beneficiary tax returns, trustees of trusts (active or passive) are required to submit the IT3(t) return, in which they need to disclose all amounts, including income, capital gains, and non-taxable amounts, vested to beneficiaries.
This enforcement action underscores SARS’ commitment to addressing long-standing compliance gaps within the trust sector. Trustees must now ensure that all outstanding returns are submitted timeously, as non-compliance will automatically trigger penalties.
2. Stricter Employer Filing Requirements
SARS has also tightened controls over employer submissions, particularly the annual EMP501 reconciliation. A key requirement is that all employee records must include valid Income Tax Reference Numbers.
Submissions containing missing or invalid tax numbers will be rejected, potentially leading to:
- Filing delays
- Administrative burdens
- Increased risk of non-compliance penalties
Employers must therefore ensure that all IRP5 certificates are accurate and complete, with valid tax reference numbers captured for each employee. This reflects SARS’ ongoing emphasis on data integrity and real-time validation.
3. Introduction of Global Minimum Tax (GMT) Registration
In line with global tax reforms, SARS has launched the registration and notification functionality for Global Minimum Tax (GMT) via the eFiling platform.
This marks a significant step toward implementing international tax standards aimed at ensuring multinational enterprises pay a minimum level of tax of 15% globally. Affected entities should prioritise understanding their obligations and completing the required registrations to avoid compliance risks.
4. VAT Developments and Modernisation
While the anticipated increase in VAT registration thresholds has not yet been formally promulgated, SARS has updated thresholds on its official platforms as well as a frequently asked page as to how vendors should deal with these new thresholds from a registration and potential deregistration perspective. It is likely that the increase in the voluntary and compulsory thresholds will be introduced in the next round of tax amendments which we will keep you updated on.
At the same time, the VAT modernisation project is progressing. Increased scrutiny of VAT submissions suggests that SARS is preparing for a more integrated, possibly real-time VAT reporting system. Such a system would enhance transparency and efficiency but will require taxpayers to maintain high levels of accuracy and compliance in their VAT reporting processes.
Judicial Developments: Shifting Legal Interpretations
Alongside operational changes, recent court decisions have introduced important legal considerations that affect taxpayer rights and obligations.
1. Representation in the Tax Court
In Commissioner for SARS v Poulter (1110/2024) [2026] ZASCA 68 (12 May 2026), the Supreme Court of Appeal ruled that a non-legal practitioner may represent a taxpayer in the Tax Court.
This decision confirms and resolves the uncertainty regarding taxpayer’s right to representation, affording taxpayers greater flexibility in choosing who may act on their behalf in tax disputes.
2. Substance Over Form Reinforced
In Absa Bank Ltd and Another v Commissioner for SARS [2026] ZACC 15, the Constitutional Court confirmed that the application of the General Anti-Avoidance Rules is not limited to the party that designed or implemented every aspect of an avoidance arrangement. A taxpayer may constitute a "party" to an impermissible avoidance arrangement even where it lacks knowledge of all steps within the broader structure, provided its participation forms an integral part of the arrangement. The Court further confirmed that GAAR may apply to parties other than the person who directly obtains the underlying tax benefit. The decision reinforces the principle that, in applying GAAR, SARS and the courts will examine the objective commercial and economic substance of the arrangement as a whole rather than the taxpayer's subjective understanding of every component thereof.
3. Stricter Approach to Dispute Resolution
Recent case law also highlights a more rigid stance on tax dispute procedures. Courts are increasingly holding taxpayers to the requirement that objections must be complete and accurate from the outset.
Introducing new grounds of objection at a later stage is becoming extremely difficult, reinforcing the need for:
- Careful preparation
- Comprehensive initial submissions
- Strong technical support when lodging objections
4. Tightened Controls on VDP and Debt Compromise
SARS has also intensified scrutiny over the Voluntary Disclosure Program (VDP) and Debt Compromise processes. Applications are now subject to stricter validation and review, reducing the likelihood of acceptance where requirements are not fully met.
Taxpayers seeking relief through these mechanisms must ensure full compliance with all criteria and provide complete and accurate disclosures.
Conclusion
The latest developments reflect a clear and consistent message: SARS is strengthening enforcement, enhancing digital systems, and adopting a more rigorous compliance framework.
Taxpayers—whether individuals, trusts, employers, or multinational entities—must adapt to:
- Increased data validation requirements
- Stricter filing standards
- Heightened legal scrutiny
Equally, the evolving judicial landscape reinforces the importance of substance, accuracy, and preparedness in all tax matters, particularly in disputes.
Proactive compliance, supported by professional advice, is now more critical than ever. Taxpayers are encouraged to engage with their advisors or nearest PKF office to navigate these changes effectively and mitigate potential risks.
