The South African Revenue Service (SARS) has responded positively to the updated revenue projections tabled in the 2026 Budget, signalling that the revised target remains achievable. The tax authority says its ongoing drive to strengthen compliance, improve taxpayer service and advance modernisation efforts continues to underpin collection performance.

Although the global environment remains uncertain and domestic growth subdued, SARS maintains that incremental administrative gains and closer alignment with prevailing economic conditions are helping to support revenue momentum. The revenue service has again underscored its role in safeguarding the fiscus and contributing to overall fiscal stability.

The full SARS media statement follows below verbatim.

SARS WELCOMES THE REVISED REVENUE ESTIMATE FOR THE 2025/26 FISCAL YEAR

Tshwane, 25 February 2026 — The Commissioner for the South African Revenue Service (SARS), Edward Kieswetter, welcomes the revised revenue estimate presented by the Honourable Minister of Finance, Enoch Godongwana. SARS will spare no effort to achieve the revised revenue estimate as it monitors South Africa’s fiscal environment and key macroeconomic indicators. SARS will align its strategy and operations to sustain its revenue performance and protect the fiscus.

Commissioner Kieswetter said that SARS’ “confidence to meet the revised revenue estimate is grounded in current economic trends and the organisation’s focus on service and compliance”.

In the Budget Speech, the Minister revised the 2025/26 revenue estimate upward to R2 006.9 billion, from the MTBPS 2025 estimate of R2 005.3 billion. This represents an improvement of R21.3 billion against the Budget 2025 printed estimate of R1 985.6 billion, and of R1.7 billion against the MTBPS 2025 estimate. SARS’ compliance efforts as at end January 2026, have contributed R11.6 billion to this improved outcome, which constitutes (54.5%) of the total uplift. This comprises cash revenue totalling R7.1 billion, made up of R3.6 billion from debt recovery and R4.5 billion in revenue-leakage prevention. SARS’ contribution is projected to be close to R14 billion (65.7%) by year-end. The revised estimate reflects improved fiscal metrics, including a tax‑to‑GDP ratio of 25.9% and buoyancy of 1.69.

The global environment in 2025 was characterised by exceptionally high uncertainty, while in early 2026, geopolitical tensions remain elevated. Domestically, economic growth has stabilised, with four consecutive quarters of expansion and further growth indicated in the most recent quarter. Household consumption was the main growth driver, increasing by more than 3.0% in 2025, compared to estimated overall GDP growth of 1.3%. SARS can confirm that revenue performance continues to reflect broader economic conditions, alongside the impact of tax-policy decisions and compliance outcomes.

Year-to-date (YTD) gross revenue amounts to R1.973 trillion, which is up from the previous year’s R1.839 trillion by R134.7 billion (7.3%). This increase includes a cash amount of R118.8 billion, up from R111.7 billion in the previous year by R7.1 billion (6.4%), secured through SARS’ improved administrative efficiency. 

YTD net revenue collection amounts to R1.586 trillion (versus 2025’s R1.460 trillion, an increase of R125.8 billion, or 8.6%). YTD net revenue also includes gains from compliance efforts worth R225.0 billion (versus R213.4 billion in 2025, up by R11.6 billion, or 5.4%). 

The revised revenue estimate, despite softening economic assumptions reflects the interplay between improved commodity prices, and the sustained focus by SARS to improve compliance. Nominal GDP growth assumptions were revised down to 4.8% (from 5.4% in MTBPS 2025) and CPI inflation was revised down to 3.3% (from 3.5% in MTBPS 2025). Real GDP was expected to improve further to 1.8% (from 1.5–1.6% at MTBPS 2025). Furthermore, in terms of GDP expenditure, the outlook for final household consumption and exports has been revised upward, while some sub-indicators such as final government consumption, gross fixed capital formation, and imports have been adjusted downward.

The breakdown of the compliance revenue of R225 billion:

·      Main contributors to cash compliance revenue are debt recovery of R84 billion, up from the previous year’s R79.6 billion by R4.4 billion (4.4%); and Paragraph 19(3) payments from large corporates worth R12.1 billion, up from the previous year’s R10.8 billion by R1.2 billion (11.5%).

·      YTD refund payments were R387.3 billion, up from the previous year’s R378.4 billion by R8.9 billion (2.4%). 

·      All leakage-prevention initiatives saved R106.3 billion versus the previous year’s achievement of R101.7 billion, up by R4.5 billion (4.4%), largely made up of:

Employment Taxes (PAYE)

Pay-As-You-Earn (PAYE) collections totalled R636.2 billion in January 2026, reflecting year‑on‑year growth of R45.9 billion (7.8%) against the previous year, slightly below the annual 2025 MTBPS expected growth rate of 8.4%.

The Y/Y growth was mainly driven by collections from employers in the finance, community, and wholesale sectors. Growth was constrained by two-pot PAYE collections of R8.5 billion, down from R10.6 billion collected in the previous year.

The introduction of the two-pot system in October 2024 resulted in exceptionally high withdrawals during its inaugural year, which led to elevated PAYE collections. Because the initial surge has diminished, current withdrawal rates have declined. 

Performance in the past ten months reflects shifts in the economic and legislative environment. PIT-related tax-policy measures announced at Budget 2025 included:

·      No inflationary adjustments to tax brackets, and rebates worth R15.5 billion; and 

·      No inflationary adjustment to medical tax credits, yielding R1.2 billion. 

Furthermore, underlying economic assumptions regarding the wage bill softened during the year, with Budget 3.0 and MTBPS estimates of 6.4% reducing to 4.8% at 2026 Budget. During this period, actual outcomes in Q2-2025 (April–June) and Q3-2025 (July–September) grew by 3.9% and 3.6%, respectively. Thus, PAYE-growth expectations shifted from Budget 3.0 of 7.8%, to 8.4% at 2025 MTBPS, and to the 2026 Budget revised outlook of 7.9%. 

CIT Total Tax Revenue Including Compliance Revenue

Gross CIT collections reached R281.5 billion, up from the previous year’s R258.1 billion by R23.4 billion (9.1%). The increase includes R26.1 billion from cash-compliance efforts, up from the previous year’s R23.7 billion by R2.4 billion (10.1%). When excluding the yield from compliance efforts, Y/Y growth reduces to R21.0 billion (9.0%).

Revenue from CIT Provisional Tax totals R262.6 billion, up from the previous year’s R237.8 billion by R24.8 billion (10.4%). Compliance efforts secured R15.5 billion versus the previous year’s R12.6 billion, increasing by R2.9 billion (22.9%). Without these compliance initiatives, Y/Y growth would have dropped to R21.9 billion (9.7%).

YTD CIT refunds amounted to R26.4 billion, up from the previous year’s R22.3 billion by R4.1 billion (18.6%). SARS’ administrative efforts prevented impermissible refunds worth R11.0 billion. In addition to this, an assessed loss of R14.3 billion for a large company was disallowed against a debit liability of R17.0 billion.

Net CIT collections total R255.1 billion, up from the previous year’s R235.9 billion by R19.3 billion (8.2%). Efforts to improve voluntary compliance secured a net amount of R51.4 billion from the previous year’s R39.1 billion, an increase of R12.2 billion (31.3%), without which Y/Y growth would have been R6.9 billion or 3.5%. 

VAT Total Tax Revenue including Compliance Revenue

Gross VAT collections of R714.6 billion are up from the previous year’s R675.9 billion by R38.7 billion (5.7%). Gross VAT includes cash revenue from compliance efforts worth R53.4 billion, up from the previous year’s R52.8 billion by R0.6 billion (1.1%). Without these gains, Y/Y growth would have been R38.1 billion or 6.1%. It is important to note that normalised growth is higher than achieved growth as Compliance Revenue (6.7%) is growing at a slower rate than Voluntary Revenue (8.4%). This reflects the increasing trend improvement in voluntary compliance.

Domestic VAT collections totalled R504.6 billion, up from the previous year’s R470.6 billion by R34.0 billion (7.2%). Of this amount, cash-compliance revenue is R33.3 billion, down from the previous year’s R35.7 billion by -R2.3 billion (-6.6%). 

This year, the gains from compliance efforts in Domestic VAT are lower owing to improved compliance in the electronic-services industry, following the previous year’s amendment to the VAT Act. A compliance dividend worth R1.0 billion (R1.2 billion in 2024/25) is therefore now part of the current-year base. Also, lower gains from rejected payments worth R1.8 billion are down by -R0.7 billion (-26.6%) versus R2.5 billion in 2024/25. Diminishing returns from compliance initiatives are due to generally improving VAT payment-compliance rates, increasing to 87.4% by 2.1% versus the previous year’s 85.3%.

Import VAT amounts to R210.0 billion, up from the previous year’s R205.3 billion by R4.7 billion (2.3%). Cash-compliance efforts contributed R20.1 billion, up from the previous year’s R17.1 billion by R3.0 billion (17.6%). Improved Import VAT revenue is thanks to robust debt collection of R15.0 billion, a R1.7 billion (13.1%) improvement since the previous year’s R13.3 billion. Without the compliance gains, Y/Y growth would have been R1.7 billion, or 0.9% lower. Import VAT experienced marginal growth of R4.7 billion (2.3%), mainly driven by increased vehicle imports due to new vehicle-sales growth of 15.7% for Q3-2025 (per the National Association of Automobile Manufacturers of South Africa). 

VAT refunds YTD paid are worth R312.4 billion, up from the previous year’s R309.1 billion by R3.3 billion (1.1%). Prevention of impermissible refunds contributed R50.1 billion, up from the previous year’s R49.0 billion by R1.1 billion (2.3%).

Net VAT revenue is R402.2 billion, up from the previous year’s R366.8 billion by R35.5 billion (9.7%). Compliance gains contributed R103.5 billion, a R1.8 billion (1.7%) gain since the previous year’s R101.8 billion. Had these efforts not been made, Y/Y growth would have receded to R37.1 billion or 7.9%.

Illicit Economy

SARS acknowledges that the illicit economy threatens our society’s safety and economic activity. It has been growing at an alarming rate across virtually all economic sectors while consuming the lawful economy, halting job creation and exacerbating crime. The illicit economy siphons an estimated 5–8% of our GDP. SARS will play a leading role in the SONA announcement by the President to establish a National Illicit Economy Disruption Programme. In this regard, SARS is also advocating a more coordinated approach with other governmental agencies, business, and sector experts, to fight crime, corruption and the illicit economy, while focusing its own efforts to deal with its specific compliance mandate to deal with   this scourge. 

Reflection on Compliance Revenue

Over the past six years, compliance revenue has become a defining feature of SARS’ revenue performance and a key contributor to fiscal stability. From R128.4 billion in 2019/20 to R304.0 billion in 2024/25, compliance revenue has grown at a compound annual rate of 18.8%, even as the economy absorbed the shocks of the pandemic and a fragile recovery. This growth reflects SARS’s move away from its reliance on economic cycles toward identifying, correcting, and preventing non‑compliance. As a result, compliance revenue accounted for 16.4% of total tax revenue in 2024/25, up from 9.5% six years ago, well above international benchmarks and a clear indicator of improved efficiency and effectiveness in revenue administration.

Bolstered compliance revenue is also rooted in SARS’ modernised taxpayer-service, risk-management, debt-collection system, all of which have boosted the Voluntary Compliance Index. Commissioner Kieswetter said that SARS’ “journey through modernisation has fundamentally been about rethinking how we serve taxpayers in a way that provides clarity and certainty, as well as making compliance easier and simpler, giving content to our motto of the best service, is no service”. 

Vision 2030 — Tax 3.0

SARS has made  significant progress in building a smart digital tax and customs administration for the future, where “tax just happens”. This is underpinned by a vision of a smart, modern SARS with unquestionable integrity, trusted and admired by all. To illustrate this phenomenal progress, during the just-concluded filing season, SARS served more than 6 million taxpayers who did not have to do anything, thanks to SARS Auto Assessments using third-party data and artificial intelligence. If they had refunds, and there was no outstanding enquiry, they would receive their refund within 72 hours. When a taxpayer files a return, it takes less than five seconds to process and issue an assessment. The process sets a new standard for tax administration. “Our Vision 2030 is to engage proactively with taxpayers by using cutting-edge technologies such as AI and machine learning, data science, sophisticated data analytics, and refined algorithms”, said Commissioner Kieswetter.

The Commissioner went on to note that “it has been seven years that SARS has unfailingly responded positively to the Minister’s challenges. Each year, we have endeavoured to help build a capable state that delivers for all South Africans, especially the most vulnerable among us. I have always said that some of us can buy our way out of economic crises, pandemics, and failures in social services, but the most vulnerable among us do not have such luxury. The Gogo in KwaMashu, the little boy and girl in Diepsloot, and people like them are reliant on government services. We have always been committed to play our part to help close that gap by collecting all that is due to the state”. 

The positive results SARS has produced over the years depend on the contribution of SARS employees and the cooperation of taxpayers and traders. Commissioner Kieswetter observed: “To all SARS employees, who are driven by our higher purpose to respond to a higher calling, thank you for being an integral part of this ongoing effort of collecting revenue that is due to the fiscus. Your work, from improving service to enforcing compliance, supports South Africa’s fiscal stability and economic recovery”. 

SARS further welcomes the Minister’s announcement of increases in VAT registration thresholds for SMMEs. SARS will be communicating in the next few weeks on the steps to be taken to give effect to the Minister’s announcement.