South Africa's tax revolution: modernising Sars for the digital economy

South Africans know the South African Revenue Service (Sars) as one of the country’s most respected public institutions. For years, Sars has stood out as a symbol of professionalism on the continent, a tax authority admired for its integrity, capacity, and results. In a time when trust in government is often frdigiagile, Sars is a rare example of how strong institutions can hold a nation together.

But even strong institutions face new tests. The way money moves in today’s economy has changed dramatically. From mobile money to online shopping, from digital advertising to streaming services and even crypto, vast new markets have emerged. These are worth billions of rand, but much of it happens in the shadows of our tax system.

The paradox is striking. South Africa has some of the most sophisticated tax policies in Africa. The laws exist; the frameworks are solid. The challenge lies not in writing good tax policy, but in making sure it is fully executed in a world that is moving faster and becoming more digital by the day.

The Policy Execution Gap

Think of it this way: having strong tax laws is like having an excellent recipe. But if the kitchen does not have the right equipment, or if ingredients go missing along the way, the final dish will not match the vision.

That is what many governments around the world are experiencing: a gap between tax policy and tax collection. The International Monetary Fund has warned that without closing this gap, countries will struggle to fund schools, clinics, and roads. It is not just about writing more rules or raising tax rates; it is about making sure the taxes that are already due are actually collected.

South Africa is no exception. Sars has the credibility and the talent, but parts of the digital economy remain hard to supervise. Fraud, underdeclaration, and tax avoidance can quietly drain billions from public coffers. For citizens, this means fewer resources for essential services, and for businesses, it means unfair competition from those who cheat the system.

Lessons from the Continent

The good news is that there are examples, right here in Africa, showing how to close the gap.

In the Democratic Republic of Congo, revenues from telecoms excise and VAT grew by 60% in just one year when digital monitoring was introduced.In Burundi, excises on online gambling shot up by over 500% in six months once transactions were tracked in real time.In Sierra Leone, telecom revenues rose by 70% in the first year, translating directly into higher tax collection.In Mali, more than USD 4 billion in monthly mobile money transactions are now supervised transparently, closing loopholes that once fuelled fraud.

These results did not come from raising tax rates. They came from using technology to make sure existing taxes were fully collected. In other words, strong policy paired with stronger execution.

Why This Matters for South Africa

South Africa does not face the same fiscal struggles as every neighbour, but it shares the same digital challenges. E-commerce, mobile payments, online betting, and digital advertising – these sectors are expanding rapidly. Unless monitored, they risk becoming the new grey zones of revenue, where growth happens but collections lag.

Sars has always been ahead of the curve. By adopting modern governance technology, tools that give real-time visibility over digital transactions, it can reinforce that leadership. For citizens, the benefit is direct: every rand collected fairly is a rand that can fund schools, hospitals, and infrastructure. For compliant businesses, it levels the playing field. For the economy as a whole, it opens space to reduce tax burdens in the future, because revenue is collected more efficiently.

More Than Numbers

This conversation is not only about money. It is about trust.

When taxpayers see that everyone pays their fair share, confidence grows. When governments can show that revenues are collected transparently and data remains sovereign, stored locally and protected, people are more willing to comply. And when the international community sees a robust system at work, South Africa’s reputation as a trusted economy strengthens.

In this sense, GovTech, the use of technology to strengthen governance, is not just a digital upgrade. It is a tool to build transparency, fairness, and sovereignty in the 21st century.

A Strategic Choice

South Africa now faces a strategic choice. The laws are strong, the institution is respected, and the foundation is there. The question is how to ensure that SARS remains a step ahead in an economy that is becoming more digital every day.

The answer lies not in raising taxes or adding new burdens on citizens, but in making sure the system works as intended. That means giving Sars the visibility, the tools, and the technology to execute policy in real time.

By doing so, South Africa could once again set the standard for the continent, showing how a respected institution can adapt, modernise, and continue to inspire confidence at home and abroad.

Closing Thoughts

The choice is not between higher taxes or higher debt. It is between letting hidden revenues slip through the cracks or using technology to make sure that policy on paper becomes revenue in practice.

Sars has already proven its strength. With the right tools for execution, it can turn that strength into even greater opportunity for government, for business, and for every South African who depends on public services.

Strong policy deserves strong execution. South Africa is ready to show the world what that looks like.

(Zini is CEO of N-Soft, a company that works with governments to increase transparency and boost domestic income without raising tax rates. The opinion expressed here isn't necessarily the position of the Sunday Tribune or IOL)