AI and the impact on taxpayers and tax practitioners

ASL is committed to helping you remain compliant in an evolving tax landscape where the South African Revenue Service (SARS) is increasingly relying on artificial intelligence (AI) to strengthen tax administration. SARS has set its sights on recovering more than R513 billion in unpaid taxes, particularly in VAT and PAYE, and AI is central to this effort.

For taxpayers, this shift means faster processes and quicker refunds. For tax practitioners, it means heavier workloads, more detailed queries, and stricter requirements to ensure every return can withstand SARS’s growing technological scrutiny.

How SARS uses AI to drive compliance

SARS has introduced AI and automation to streamline tax processes and detect non-compliance more effectively. For the 2025 tax season, millions of auto-assessments were issued based on data drawn directly from employers, banks, medical aids, and investment platforms. This enables refunds to be paid within days and assessments to be generated in seconds.

However, speed introduces certain risks. Auto-assessments may not reflect the full picture – for example, freelance earnings, rental income, or certain deductions might be excluded. Reviewing each assessment carefully remains critical. Accepting one without checking could result in later adjustments, penalties, or reversed refunds.

AI also plays a growing role in collections. SARS now employs data-driven tools to track unpaid taxes and, in some cases, may act directly against taxpayers through garnishes or legal measures. Its focus on VAT and PAYE has intensified significantly.

Why tax compliance is more critical than ever

SARS’s AI tools have elevated the importance of robust tax compliance. With access to vast third-party data, SARS can cross-check submissions with unprecedented speed and accuracy. Even a small mismatch – such as undeclared side income or unclaimed deductions – can trigger queries, audits, or enforcement actions.

For businesses, particularly those handling VAT and PAYE, unexpected collections can disrupt cash flow and affect payments to staff or suppliers. For individuals, overlooked income or deductions could result in penalties or delayed refunds.

In our experience, proactive compliance is the best safeguard. Regularly checking your eFiling status for red flags and ensuring that all income and deductions are accurately reported can prevent unexpected financial consequences. Accepting an auto-assessment without review may seem convenient, but if it omits key details, complications may arise during later audits. By partnering with us to prepare tax returns and verify assessments ahead of deadlines such as the 20 October 2025 cut-off for non-provisional taxpayers, you can remain compliant and avoid penalties.

The need for detailed information: A collaborative effort

You may have noticed our team requesting more detailed documentation than in previous years, such as bank statements, asset lists, or financial breakdowns. This is not about adding complexity – it’s a direct response to SARS’s requirements for comprehensive evidence to support filings, disputes, or debt compromise applications.

For example, when negotiating payment plans or correcting assessment errors, SARS demands thorough records to validate claims, particularly in cases involving debt relief where personal or business assets must be disclosed.

Providing this information upfront allows us to build a strong case on your behalf, ensuring smoother interactions with SARS. Our goal is to protect you from delays, penalties, or rejected applications. Your cooperation in sharing complete and accurate details is essential to achieving timely refunds and successful debt resolutions.

The growing workload for practitioners

While AI has enabled SARS to process returns faster, it has also increased the number of queries and the complexity of compliance. Practitioners are now spending more time reviewing assessments, gathering supporting documentation, and engaging with SARS on behalf of clients.

Our role has shifted from simply filing returns to acting as compliance advisors and problem-solvers. This involves ensuring that returns are complete, accurate, and defensible, while also guiding clients through SARS queries and collections. It also requires anticipating areas where assessments may be incomplete or incorrect due to automation.

Building a strong compliance partnership

SARS’s focus on compliance will continue to grow. As AI becomes more advanced, the margin for error will shrink, and the consequences of mistakes will become more serious. That is why working closely with your tax practitioner is more important than ever.

To ensure effective collaboration:

• Provide complete information upfront: bank and investment certificates, medical aid records, retirement contributions, rental schedules, and any other income or deduction details.
• Don’t rely blindly on auto-assessments: let us review them for accuracy before you accept.
• Respond promptly to SARS queries: SARS deadlines are tight, and delays can result in penalties or blocked refunds.
• Be proactive: keeping your records organised throughout the year to simplify filing and reduce risks.

Looking ahead

SARS’s adoption of AI is reshaping the compliance landscape. While it brings benefits such as speed and efficiency, it also places added demands on both taxpayers and tax practitioners. For clients, this means providing more supporting information and engaging more closely with us. For practitioners, it means heavier workloads and higher stakes in ensuring compliance.

As SARS continues to expand its use of AI, compliance standards will only become more rigorous. While this creates additional demands, our focus is on simplifying the process for you. By supplying complete information early and working closely with us, you can minimise the risk of penalties, remain compliant, and have confidence that your tax affairs are managed with diligence and care.

If you require assistance with navigating your tax affairs, please do not hesitate to contact us at tax@asl.co.za.