
Preparing for VAT Modernisation: The Time to Start is Now
Come 2028, the next Olympic games won’t be the only trending topic. With the rollout of SARS VAT Modernisation measures likely commencing in 2028, businesses are urged to start the process of preparing for VAT Modernisation as early as possible to ensure a smooth transition and optimal performance. But fortunately, you don’t have to navigate the changes by yourself. We’re here to coach you every step of the way. Here’s what you need to know (and do).
VAT Modernisation: The rollout
Before we delve into the specifics, let’s establish a few key facts. SARS is set to implement VAT modernisation requirements by 2028, giving businesses time to prepare their systems and processes. However, the benefits of e-invoicing can be reaped even sooner. Why is this important? Because early preparation not only ensures compliance but also unlocks significant business growth opportunities. It’s about being proactive, not reactive.
SARS is modernising the South African VAT system to better align with international regulatory trends. However, this is more than just a game of catch-up. In fact, SARS believes that the upcoming changes will significantly streamline processes for everyone involved—from tax authorities to vendors. How? By facilitating real-time (or near real-time) transmission of businesses’ transaction data.
This is where your part becomes vital. When VAT Modernisation comes into effect, you will have to have the measures in place for SARS to receive real-time VAT data digitally. Ergo, e-invoicing. However, as mentioned before, the sole purpose for early preparation isn’t only attributed to playing compliance catch-up. According to System1A, switching to e-invoicing unlocks significant business growth opportunities, and plays a critical role in today’s marketplace, including;
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- Increased data and information security
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- Improved customer experience and relationships
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- Enhanced cash flow
But unfortunately, while many may be aware of this and know that some form of preparation and change to existing systems will be needed, underestimating the required preparation could lead to a rush and scurry when it’s already too late, potentially causing significant disruptions to your business.
Are you ready?
Currently, business systems are designed for preparing a VAT return, usually every two months or monthly. However, the question arises: Do these systems have the capability to handle near real-time reporting of detailed invoice data as transactions occur? Here’s what you need to consider:
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- Can your system prepare granular transaction data in near real-time? SARS is aiming to have businesses report VAT transactions on a daily and eventually an hourly basis. Your systems will need to be able to cope with these demands.
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- Do your current systems allow for data flexibility regarding formatting/structuring? To be correctly ingested into SARS receiving systems, invoice data will likely have to be sent in a standardised, pre-specified format. Can your current systems accommodate this?
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- Do you have systems to support the secure transfer of large quantities of invoice data regularly? Invoice data will likely be required to be transmitted via secure file transfer. Does your existing team have the skills (and resources) to set this up and maintain it, or do you need to consider getting external expertise to set this up for you?
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- Is your tax function/department ready for these changes? Given the move to more real-time reporting, their role concerning VAT will evolve. They will need to adapt to more frequent reporting and ensure that the data being reported is accurate and complete. They need sufficient time to adapt to this, so it’s important to start preparing now.
What’s the plan?
It doesn’t have to be that complicated – especially with a dedicated VAT Modernisation specialist. Why? Beyond regulatory requirements, traditional invoicing processes are labour-intensive and need to be updated.
This being said, your finance team is a valuable asset, hired for their expertise, not for administrative drudgery. Routine tasks not only drain their time but also stifle your business’s growth potential. Implementing e-invoicing is like passing the baton to a tool that can handle the repetitive work, freeing your finance team to concentrate on strategic, value-driven initiatives that truly drive your business forward. The first step? Well, you’re already in the right place – now let’s chat!