South Africa: Public consultation on e-invoicing and digital reporting

The South African Revenue Service (SARS) on August 17, 2026, published the VAT Modernisation Consultation Paper, soliciting public feedback on its proposed digital VAT model, which combines e-invoicing, an interoperability framework, and digital reporting to modernize VAT administration and compliance.

SARS has invited stakeholders to submit comments by October 16, 2026.  

Background

SARS is modernizing the VAT administration compliance process, transitioning from manual, declaration-based VAT administration to a digitally enabled, data-driven model. The goal is to embed VAT compliance within business processes, reduce manual filing, expedite refunds, and minimize audits. The proposals are informed by international best practices from jurisdictions such as Mexico, Italy, and France, which have reduced VAT gaps through real-time e-invoicing and digital reporting.

Mandate introduction and scope

The consultation paper proposes a digital VAT model based on three pillars: e-invoicing, an interoperability framework, and digital reporting. The mandate will be implemented in phases, starting with voluntary adoption and progressing to mandatory requirements. Entities in scope include large taxpayers, government entities, micro, small and medium enterprises (MSMEs), and B2C transactions. The phased rollout prioritizes large businesses and government procurement, followed by MSMEs and B2C transactions.

Overview of amendments

• E-invoicing: Taxpayers must issue structured, machine-readable tax invoices using a prescribed data model. E-invoices must comply with technical standards such as EN16931 CIUS, UN/CEFACT Cross-Industry Invoice, or Peppol PINT BIS. The e-invoice must contain all information required by tax, commercial, and accounting legislation, and be processed automatically into accounting and ERP systems. PDF or scanned invoices are not permitted. The exact requirements surrounding these standards will be confirmed in the forthcoming regulations.
• Digital reporting: Transactional VAT data, including e-invoice information, must be transmitted electronically to the tax authority in near real-time. The model supports continuous transaction controls, enabling validation and reporting at or near the time of sale. The interoperability framework connects taxpayers, service providers, and the tax authority through accredited access points, ensuring secure, standardized data exchange.
• Technical specifications: The interoperability framework is decentralized, with multiple accredited service providers acting as access points. Service providers validate, clear, and transmit e-invoices and VAT data. The tax authority receives a subset of tax-related data for risk management, pre-filled returns, and future auto-assessment capabilities. Data formats and schema requirements will be defined in forthcoming regulations.

Entities in scope

The mandate is expected to be applicable to both resident and nonresident taxpayers engaged in VAT-liable activities in South Africa. Large taxpayers and businesses are expected to adopt e-invoicing and digital reporting first, given their advanced systems. Government entities will be mandated to accept e-invoices for procurement. MSMEs will transition gradually, supported by onboarding assistance and simplified digital tools. B2C transactions will be included in later phases, with incentives to encourage invoice acceptance.

Transactions covered

The mandate covers B2B, B2G, and B2C transactions. Corrective documents such as credit and debit notes are included. Sector-specific exceptions and deemed sales will be addressed during the consultation and solution design process. B2C transactions will be included in later phases, extending the mandate to transactions involving non-VAT-registered taxpayers, businesses, and end consumers. Incentives may be introduced to encourage invoice acceptance and validation in this segment.

Data formats

E-invoices must be structured and machine-readable, using prescribed schema formats (e.g., UBL, CII, Peppol BIS). Transport networks will leverage peer-to-peer service provider connectivity. Signature requirements and technical standards will be defined in forthcoming regulations.

Required use of third-party providers

Taxpayers must select accredited service providers (access points) for e-invoicing and digital reporting. Service providers are responsible for validation, clearance, and secure data exchange. The tax authority will publish a list of accredited providers.

Implementation timeline

The proposed roadmap includes the following five phases:

• Preparation (2026/2027): The tax authority will conduct research and stakeholder consultations to refine policy options and assess readiness, with draft regulations published during this phase (12 months).
• Solution Development (2027/2028): The VAT modernization solution will be designed and built, including technical standards and regulatory frameworks (12 months).
• Validation and Testing (2028/2029): Quality assurance testing with voluntary participants will confirm system performance and refine processes (six months).
• Pilot (2029/2030): Voluntary pilot with priority segments (large taxpayers and government) will test live operations and resolve technical issues (six months).
• Phased Implementation (from 2030, over 36 months): Mandatory adoption will begin with large taxpayers and government entities, followed by MSMEs and B2C transactions, with the rollout extending over approximately 36 months.

Penalties, exemptions, and transitional relief

Pending details. Penalty provisions, exemptions, and transitional relief will be defined in draft regulations and subsequent guidance.

Next steps

Stakeholder consultations are ongoing, with feedback due by October 16, 2026. The tax authority will publish draft regulations, technical specifications, and guidance on registration, onboarding, and compliance. Voluntary pilots and industry testing will precede mandatory adoption. Support channels and training will be provided, especially for MSMEs.

For more information, please contact a KPMG professional:

Madelein van Zyl | madelein.vanzyl@kpmg.co.za

Tania Davids | tania.davids@kpmg.co.za

Teresa Fondse | teresa.fondse@kpmg.co.za

Philippe Stephanny | philippestephanny@kpmg.com

Lyubov Skenderova | skenderova.lyubov@kpmg.com

Ramon Frias | ramonfrias@kpmg.com