The South African Revenue Service has formally unveiled “Modernisation 3.0”, a sweeping digital transformation programme that will give every taxpayer a unique digital identity secured by biometric and two-factor authentication, deploy artificial intelligence to automate compliance and introduce an instant payment system backed by the South African Reserve Bank.
The announcement came as Sars confirmed it had collected R2.01-trillion in net revenue for the 2025/2026 financial year — the first time it has crossed the R2-trillion mark — representing 8.4% growth year on year and outpacing nominal GDP growth of 5.4%.
Under Modernisation 3.0, taxpayers and their representatives will be issued a unique digital identity that consolidates all their accounts with Sars into a single authenticated view. The system will allow taxpayers to update their status, view all accounts and make payments without needing to contact the agency directly.
The programme also introduces an intelligent case management system that will automate routine work and apply big data and what Sars described as “agentic AI” to identify compliance risks and foster voluntary compliance. The use of the term — which refers to AI systems capable of taking autonomous, multi-step actions rather than simply responding to prompts — is notable for a South African government agency and signals the extent of Sars’s ambitions in applying the technology.
The instant payment system, to be developed with the Reserve Bank, is designed to reduce gradually the amount of cash in circulation — a goal that aligns with the central bank’s broader push towards digitising the payments ecosystem, including its role in the PayShap instant payments platform.
Central role
Modernisation 3.0 also targets the VAT system, with plans to enable automatic assessment of VAT returns. On the trade side, Sars said customs modernisation would support a “no-stop border-post concept” involving the whole of government, streamlining the flow of goods across South Africa’s borders.
The programme builds on Sars’s existing auto-assessment capability, which saw more than six million taxpayers receive automatic assessments in the most recent filing season — requiring no action on their part if they were satisfied with the outcome. Commissioner Edward Kieswetter described this in a statement as the realisation of a vision in which “tax just happens”.
Read: Sars turning to AI to collect more tax
Technology is already playing a central role in Sars’s compliance and enforcement operations. The agency said it had prevented an estimated R75-billion in revenue leakage during the year through syndicate-crime investigations, investigative audits and verification processes underpinned by data science. A preliminary R316.4-billion was secured from identifiable compliance activities in 2025/2026, comprising R164.6-billion in cash collections and R151.8-billion in leakage protection.
Sars estimated that the illicit economy continues to cost the fiscus more than R100-billion/year through smuggling, customs fraud, counterfeit trade and organised tax crime.
Revenue collections have grown at a compound annual growth rate of 5.8% over the past seven years, with the tax-to-GDP ratio reaching 25.9%. The result came in R24.7-billion higher than the estimate announced by finance minister Enoch Godongwana in his 2025 budget speech, a surplus that Sars said had allowed the minister to avoid an additional VAT increase. — (c) 2026 NewsCentral Media
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