The South African Revenue Service will pay Microsoft almost R1.6-billion over three years to renew its software licences and support, and IBM nearly R1.2-billion, under contracts approved without open tenders, its latest annual report shows.
The Microsoft deal, worth R1.58-billion, renews Sars’s Microsoft enterprise licence agreement and unified support service for three years – roughly R526-million a year. The IBM contract, worth R1.17-billion, renews IBM hardware, software, maintenance, support and professional services, also for three years.
Both are listed in the Sars 2025/2026 annual report under “procurement by other means” – deviations from normal competitive bidding – as “sole source (limited bid)” awards. Both were bought on the terms of framework agreements pre-negotiated by the State IT Agency, which public bodies can use to buy from approved suppliers without running their own tenders.
Other technology deals approved outside open tenders in 2025/2026 include a R141.6-million, 24-month contract with Vodacom running from April 2026, a R95-million change to a Software AG subscription, R63.8-million for Dell EMC maintenance and support, and R55-million for three years of security assessment and penetration testing by Orange Cyberdefense.
The spending comes as Sars puts AI to work on both sides of the counter. Pulse, an internal AI assistant for staff, was launched in December 2025, according to the annual report. Sars also told parliament’s standing committee on finance last week that it had deployed Microsoft Copilot, according to the Parliamentary Monitoring Group’s transcription of the meeting.
AI assistant
Lwazi, the AI assistant on the Sars website and app, had answered more than 2.7 million taxpayer questions by the end of March 2026, with an 82.9% positive feedback rating. That figure is cumulative from Lwazi’s launch on 15 November 2024. The previous annual report put the total at 805 000 by the end of March 2025, implying about 1.9 million questions in the 2025/2026 financial year.
Taxpayers are moving to other digital channels, too. Sars handled 4.4 million WhatsApp requests in 2025/2026 and 22.4 million requests through USSD, the text-menu service that works on basic phones.
Sars’s own annual report lists underfunding among its key risks, warning of the impact on its “legal mandate” and committing to build a business case for a different funding model.
Finance minister Enoch Godongwana allocated “an additional R7.5-billion over the MTEF”, the three-year medium-term budget period, to Sars in his May 2025 budget speech, as TechCentral reported when the allocation was first tabled in March 2025.
Commissioner Johnstone Makhubu, who took over from Edward Kieswetter on 1 May 2026, told MPs that Sars and national treasury were exploring the budget facility for infrastructure – a mechanism normally used to fund large public infrastructure projects – to pay for R7-billion to R10-billion of its modernisation programme, as Transnet has done, according to the Parliamentary Monitoring Group’s account of the meeting. Sars has also asked for about R6.3-billion over the medium term for operating costs, partly to replace an ageing workforce whose average age is 47.
Makhubu also told MPs that crypto assets were increasingly being used to move money out of the country, the group reported. Regulations giving effect to the Organisation for Economic Co-operation and Development’s Crypto-Asset Reporting Framework, which requires crypto service providers to report their customers’ transactions to tax authorities, were published on 28 November 2025, and Sars expects to implement the framework in the 2026/2027 financial year. — (c) 2026 NewsCentral Media
