Sars Commissioner Makhubu: AI Modernization Strategy to Boost Compliance

• Sars Commissioner Johnstone Makhubu outlined a strategic vision for tax administration centered on trust, institutional capability, and modernization at the 13th Annual Tax Indaba.
• The core of this strategy is Sars Modernisation 3.0, which aims to build an intelligent tax and customs platform utilizing data, automation, and artificial intelligence (AI).
• Key initiatives include modernizing VAT, customs, and excise, implementing intelligent case management, developing digital identity capabilities, and using AI to improve processes and service delivery.
• The 2025/26 tax year saw Sars collect over R2 trillion for the first time, marking an 8.4% revenue increase and its strongest performance in nearly three decades.
• Makhubu emphasized that technology will augment human capabilities to make compliance easier, services faster, and enforcement more precise, rather than replacing human roles.

The core of Sars Modernisation 3.0 is the development of an intelligent tax and customs administration platform, powered by data, automation, and artificial intelligence (AI), all while maintaining robust governance and public accountability.

The South African Revenue Service (Sars) recognizes the imperative to leverage current progress to elevate its operational standards, indicating that a failure to do so would result in missed opportunities. During the 13th Annual Tax Indaba held in Sandton on Monday, Sars Commissioner Johnstone Makhubu reiterated his strategic vision for the evolution of tax administration. This comprehensive approach, central to the Sars Commissioner Makhubu AI modernization strategy, places trust, institutional capability, and ongoing modernization at its core, aiming to bolster compliance and secure South Africa's financial future.

While revenue generation remains a primary objective, Commissioner Makhubu emphasized that enduring success hinges on establishing a more reputable institution that simplifies compliance, efficiently addresses non-compliance, and adapts to the evolving requirements of taxpayers and traders. He articulated that Sars's achievements extend beyond mere revenue figures, stating that sustainable revenue collection is defined by both the amount gathered and the methodology employed. This sustainability, he noted, is rooted in trust, institutional capability, and the quality of service provided, asserting that a tax authority's true measure lies in its treatment of taxpayers, its operational conduct, and its ability to gain public confidence.

This address followed comprehensive consultations with various stakeholders undertaken during his initial months in office, having assumed the role in April. Sars views its recent successes and performance as a foundation for pursuing a more ambitious agenda, which prioritizes accelerated modernization, foundational improvements, and the reinforcement of institutional core principles. Central to this strategic direction is Sars Modernisation 3.0, an initiative designed to construct an intelligent platform for tax and customs administration.

The core of Sars Modernisation 3.0 is the development of an intelligent tax and customs administration platform, powered by data, automation, and artificial intelligence (AI), all while maintaining robust governance and public accountability. This strategic embrace of technology underscores the South African Revenue Service AI initiative, aiming to transform how tax compliance is managed and enforced. Specific initiatives under this modernization effort encompass the modernization of VAT, customs, and excise operations; the implementation of intelligent case management systems; the development of digital identity functionalities; and the application of AI to enhance routine processes and service provision, marking a significant shift in AI in South African tax compliance.

Commissioner Makhubu articulated that the future of Johnstone Makhubu tax administration is characterized by a collaborative synergy between human expertise and technology, rather than a confrontation. The goal is to simplify compliance, expedite services, and sharpen enforcement. Technology, he clarified, is intended to augment human capabilities, not supplant them, aligning with the Sars future technology vision. Ultimately, he stated, these advancements must translate into a tangible improvement in the taxpayer experience.

While acknowledging Sars's current stability and resilience, Commissioner Makhubu cautioned that future triumphs necessitate proactive measures. This warning comes despite a period of significant achievement for the revenue service. The 2025/26 tax year marked the most robust period in Sars's nearly three-decade existence, with collections surpassing R2 trillion for the first time, representing an 8.4% increase in revenue.

Makhubu stressed that effective leadership involves anticipating future risks and addressing them proactively, rather than merely commemorating current achievements. He emphasized Sars's duty to prepare for forthcoming challenges, stating that the organization's responsibility is to be ready for the future before it arrives. This forward-looking perspective underpins the urgency and ambition behind the Sars Modernisation 3.0 strategy, ensuring that recent gains are not merely celebrated but leveraged for sustained institutional strength and effectiveness.

Lawyers and compliance officers should anticipate increased precision and efficiency in SARS's enforcement and compliance processes due to the accelerated adoption of AI and data analytics. This necessitates advising clients on adapting to technologically advanced tax administration, ensuring robust data governance, and preparing for more targeted audits and inquiries.

Source: Original reporting via Moneyweb