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• Illicit Activities and Compliance Erosion: Crime, corruption, and illicit trade (R6.7 billion seizures) undermine social cohesion; Transnet inefficiencies and policy uncertainty affect trade. • Regulatory Changes: Constitutional Court ruling on tax confidentiality requires amendments; Zondo Commission recommendations demand governance reforms. • Unemployment: In Q1 2025, South Africa’s unemployment rate increased by 1 percentage point to 32.9%. The weak labour market and high structural unemployment rate do not bode well for employment taxes. Youth unemployment above 60% is worrying in that not only is it an issue of economic capacity, but a serious risk to social cohesion if not arrested. • Electricity: Electricity supply has stabilised, with Eskom marking 300 load-shedding-free days on 20 January 2025. Key operational successes include the return of Koeberg Unit 2, which is contributing up to 930 MW to the grid with an impressive Energy Availability Factor of 99.95%, and the restoration of Kriel Unit 6, which added 475 MW. Much still has to happen to restructure the electricity industry and attract more private investment across the value chain. • Trade & Logistics: The inefficiencies at Transnet remain a key risk for exports, coupled with uncertain global demand. Trade is influenced by economic globalisation. Cross-border transactions play a pivotal role in economic growth, facilitating international trade, commerce, and financial transactions. Economic globalisation comes with risks such as inflation and supply-chain insecurity. SARS will continue exploring flexible tax policies to support economic stability and growth.
depreciation of just over 3% against the dollar. The rand, however, has been riding on an improved domestic economic outlook amid positive developments that have reduced South Africa’s political risk and provided a more solid foundation for growth. Global risks to the currency include geopolitical tensions that may arise following the outcome of elections in several countries. • Cybercrime: Cyber insecurity is among the top ten risks identified in the World Economic Forum Global Risk Report 2024. Discouragingly, cyber espionage is still one of the risks expected to increase in severity. Cybersecurity presents opportunities for tax administrations because well-managed cyber risks and resilience can enhance reputation and reliability. • Digital transformation of government: It is encouraging that through the Presidency and Department of Communications and Digital Technologies the SA Government has adopted a “whole of government” (WOG) strategy for the digital transformation of government. Of importance is the foundational Digital Public Infrastructure across the WOG.
4.2.1.2 OPPORTUNITIES
• Government Alignment and Economic Recovery: MTDP priorities (inclusive growth, job creation) align with SARS goals; stabilized electricity (300 load-shedding-free days by Jan 2025), lower inflation (3% Dec 2024), and reduced repo rate (7.50%) boost activity and revenue. • Policy and Technological Initiatives: VAT/customs modernisation (e.g., e-invoicing with SARB); R13 billion tax relief for renewables; partnerships with DHA for ID systems and municipalities for VAT / mSCOA. • Stakeholder Engagement: 198 engagements with BASA/ practitioners; Trade Facilitation Index at 71.60% (above regional average); Two-Pot Retirement System enhances compliance.
4.2.2 Global Factors 4.2.1.2 OPPORTUNITIES
• Economic Growth and Trade: Projected 3.3% global GDP growth (2025–2026); leverage trade with China (4.6% growth forecast) and emerging markets via AfCFTA and WCO collaborations. • Technological Advancements: AI, data analytics, and digital platforms (e.g., OECD digital service taxes, “Amount A” Convention) enable real-time reporting, e-invoicing, and non- compliance detection.
4.2.1.3 THREATS
• Economic Challenges: Low GDP growth (0.6% in 2023), high unemployment (32.1% Q3 2024), poverty, and currency depreciation (R18.18/$ Dec 2024) strain fiscal capacity and widen tax gaps.
SARS Modernisation White Paper 2025/26 – 2029/30
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