While Finance Minister Enoch Godongwana pointed to various tax measures that beat expectations in the past year, experts did not miss the R15 billion shortfall in SARS tax debt collections.
Delivering his 2026 Budget Speech on Wednesday (25 February), Godongwana pointed to an over-performance in several revenue streams.
This includes VAT, corporate income tax and dividends tax—all of which performed above expectations.
However, a major caveat to all the numbers pointing up is a R15 billion shortfall in SARS’ tax debt collection target.
Outstanding tax debt stands at R646 billion, of which R518.2 billion is undisputed. SARS only collected R79.4 billion by 31 January 2026.
“The primary reasons for this shortfall relate to the scale of outstanding, undisputed tax debt and missed collection targets,” said Marilize De Kock, Senior Manager at Forvis Mazars.
“This places the tax authority under significant pressure, which will likely lead to a sharpened enforcement posture, coupled with operational enhancements in bank collaboration and legal recovery.”
Godongwana 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 of the end of January 2026 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 said its contribution is projected to be close to R14 billion (65.7%) by year-end.
SARS is going to go harder
SARS Commissioner Edward Kieswetter said that the revenue service will “spare no effort” to achieve the revised revenue estimate.
“SARS will align its strategy and operations to sustain its revenue performance and protect the fiscus,” he said.
Kieswetter, who will retire from the position in April 2026, specifically mentioned pushing up compliance revenue, which includes debt recovery from taxpayers.
“Over the past six years, compliance revenue has become a defining feature of SARS’ revenue performance and a key contributor to fiscal stability,” Kieswetter said.
“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%.”
However, while SARS characterises this growth as a result of its modernisation programmes and bringing “certainty and clarity” for taxpayers, tax experts point out that, in practical terms, the taxman is clearly turning the screws on taxpayers.
According to Mandisa Ngomane, Associate Director in Corporate Tax at KPMG South Africa, the bigger tax haul over the past year directly correlates with increased audit activity.
With a bigger target now set and significant debt outstanding, the screws are going to tighten even more.
This will be accompanied by “a more uncompromising approach to disputes, including the imposition of penalties, attempts at piercing prescription, and bypassing procedure in some instances, bypassing procedure”.
Ngomane warned of “indiscriminate reluctance” on the part of SARS to exercise its discretion in favour of taxpayers, even where it is justified to do so.
“Taxpayers can expect this trend not only to continue but to intensify,” Ngomane said.
According to Tax Consulting SA, the tax authority’s expanding use of technology and targeted compliance initiatives—particularly in respect of high-net-worth individuals, large businesses, and the digital economy—indicate that SARS’ tax collection efforts are becoming more sophisticated and working.
However, beyond chasing down more money in the hidden corners of the economy, the group also identified a significant structural risk.
Specifically, the fact that SARS still relies heavily on a narrow tax base, with a small percentage of taxpayers contributing a disproportionately large share of tax revenue collected by SARS.
“This reinforces Treasury’s long-standing view that sustainable revenue growth will ultimately depend more on economic expansion and the broadening of the tax base, rather than on increasing tax rates,” Tax Consulting said.
