The South African Revenue Service (SARS) is ramping up efforts to hold employers accountable for tax compliance, particularly in areas historically prone to neglect—such as contractor classification, fringe benefits, travel claims, and the Employment Tax Incentive (ETI).
With the 2025 tax season approaching, employers are reminded to finalise their Annual Declarations by the 31 May deadline. SARS has stressed the importance of these submissions, as they form the basis for issuing accurate auto-assessments and pre-populated returns for individual taxpayers.
Amid growing fiscal pressures, SARS has been tasked by the National Treasury with closing the national budget gap—backed by significant additional funding. This has set the stage for increased scrutiny across all facets of personal and payroll tax.
According to Tax Consulting South Africa, this mandate will likely see SARS leave “no stone unturned” in enforcing compliance among both employers and employees.
In the 2024/25 fiscal year, SARS reported a R81.8 billion (12.6%) year-on-year increase in net personal income tax collections. This was largely driven by above-inflation Pay-As-You-Earn (PAYE) growth in the finance and community services sectors. Additionally, withdrawals under the new Two-Pot retirement system generated R12.9 billion in tax revenue—more than double the initially projected R5 billion.
The Voluntary Compliance Index also rose slightly, from 75.10% to 75.48%, indicating improved payroll discipline among employers. While modest, this shift highlights the importance SARS places on incremental behavioural improvements across the tax base.
Tax Consulting SA expects SARS to intensify enforcement in the following under-monitored areas:
Historically difficult to monitor at scale, these areas are now under sharper focus as SARS expands its capacity with more auditors, analysts, and compliance officers.
One notable initiative is Operation AmaBillions—a targeted compliance campaign aimed at recovering outstanding tax debts and unfiled returns. The operation is expected to raise an additional R70 billion over the next three years.
As part of this effort, SARS plans to grow its workforce significantly, starting with 500 new hires in the short term, and potentially reaching 1,500 over time. These new recruits will reinforce the agency’s specialised teams formed in recent years to handle complex tax areas, including high-net-worth individuals (HNWIs) and crypto asset holders.
The HNWI unit has already delivered substantial returns, while the crypto tax unit is intensifying its efforts as legal clarity around digital assets improves.
SARS estimates that up to R500 billion in unpaid taxes remain in the system and has already identified over 115,500 individuals with significant economic activity—such as substantial asset holdings and bank flows—who are not filing tax returns. To date, 54,800 audit cases have been launched, with R5.56 billion in assessments issued and R1.36 billion collected.
Eight key sectors have been flagged as hotbeds of non-compliance, particularly regarding PAYE:
In nearly every sector, PAYE compliance is a critical focus.
Employers who maintain rigorous payroll records—ensuring accurate reporting, clean reconciliations, and well-documented allowances—will be in a much stronger position to withstand SARS scrutiny, or avoid it altogether.
As SARS intensifies its enforcement drive, tax compliance is no longer just a back-office function—it’s a strategic imperative.
