Obstacles to look out for.
When considering how to prepare for VAT Modernisation, it is important to note that real-time reporting may bring about challenges for certain SA businesses, especially when it comes to system readiness. While siloed tax functions and adhoc data preparation processes may have been sufficient under the current framework, such systems will come under significant strain when real-time reporting comes into effect - unless needed changes are made beforehand.
According to Deloitte, common system obstacles that should be addressed include:


With limited database access (often due to ERP complexity or licensing restrictions), tax functions are often left to rely on their IT teams to obtain the data needed to compile the relevant, needed VAT reports. Such data bottlenecks present a significant challenge under real-time VAT reporting where VAT data will be expected to be transmitted to SARS within the day (or even within the hour).
Data siloes or insufficient access
In many organisations, VAT data is, unfortunately, not stored in a centralised, “ready to transmit” format. Instead, this data is often housed in multiple locations, often containing inaccuracies and/or insufficient level of detail. This results in such data having to be manually processed or adjusted by tax functions before it is fit for purpose. Such processes will not work under real-time reporting, which calls for automated data transmission processes.
Manual data processing
Many tax functions are unable to efficiently analyse and process tax data due to insufficient tools in place, exposing the tax function to a heightened risk of error and a reduced ability to identify potential risk areas, which can result in unintentional non-compliance.
Insufficient data analytics tools
How to prepare for VAT Modernisation in the meantime?
Not sure where to start? Here are some of the measures that your business can take to ensure readiness for SARS’s upcoming, future changes.
In preparing for upcoming VAT reforms, it is important for businesses to revisit their current VAT compliance and administration processes. This includes looking at what their data looks like, how it is currently stored, as well as the processes involved in accessing, processing and formatting this data. This will help to evaluate whether current processes will be able to accommodate or scale with new regulation. Alternatively, such investigations will help to highlight if certain adjustments or changes need to be made.
With the release of its discussion paper on VAT modernisation, South African Revenue Services (SARS) have provided valuable insights into the planned, future trajectory of the country’s VAT system. However, businesses’ tax functions should still continue to proactively monitor and analyse further developments and updates in this space, allowing businesses to strategically align their operations to comply with evolving requirements.
With e-invoicing being the likely way forward when it comes to future VAT compliance, businesses should become familiar with what e-invoicing is and what it is not. They should then assess whether it may be beneficial to incorporate a dedicated e-invoicing software into their existing business processes.
It should also be noted that the benefits of e-invoicing are not only limited to satisfying VAT modernisation requirements but can significantly enhance and strengthen many key business processes. Learn more about the benefits of e-invoicing here.
