The South African Revenue Service has warned the National Treasury that funding constraints are limiting its ability to push back against the syndicates behind a surge in the illicit economy, whose growth has outstripped the formal economy for more than a decade, peaking at 10% of GDP.
In its 2026/2027 annual performance plan, Sars highlights the growth of the illicit economy, with high-risk areas being tobacco, alcohol, fuel, gold and crypto-related activities.
It says that during the 2026 medium-term expenditure process, Sars submitted a request for a baseline correction in response to the persistent structural underfunding that had built up across successive budget cycles.
Despite the “urgent need to restore funding to reflect Sars’s actual cost drivers”, the document says, the preliminary allocation for financial 2027 introduces further cuts of R76.6m, with an additional R157.3m cut the following year.
The performance plan says underfunding will jeopardise Sars’s ability to fully implement key modernisation and enforcement initiatives, slow down progress on critical digital infrastructure, analytics, and AI capability, and reduce frontline capacity needed for combating illicit economic activities.
Click here to read more:
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.