The SA Revenue Services (SARS) has for the first time shattered the R2 trillion threshold, collecting R2.01 trillion in net revenue for the 2025/26 financial year – yet while this landmark 8.4% year-on-year increase highlights a high-performing tax administration, it also underscores a tightening enforcement environment for Small and Medium Enterprises (SMEs).
For SMEs, tax compliance extends beyond payment. It is a continuous process of managing deadlines, documentation and reporting, often without the internal capacity that larger firms rely on.
Small businesses make up more than 90% of companies in South Africa and employ around 60% of the workforce. But many operate with limited financial buffers, which makes routine obligations more difficult to absorb.
For many SMEs, compliance is no longer just a requirement, it is a cash flow risk.
Asemahle Mtshali, who runs a catering business in Soweto, says staying compliant is part of operating sustainably, but it comes with trade-offs.
“You want to do things properly, but it takes time and resources,” she said. “Sometimes you are choosing between paying a supplier and making sure everything is submitted on time.”
Her experience reflects a broader reality where compliance becomes an operational pressure point rather than a routine administrative task.
SMEs face timing pressure
A key pressure facing SMEs is the timing of tax obligations. In many sectors, businesses are required to meet tax deadlines before receiving payment from clients.
This is particularly common where late payments are standard practice, creating a mismatch between incoming revenue and outgoing commitments. For smaller firms, that gap directly affects liquidity.
Independent tax analyst Sandile Sibiya, who advises small businesses on compliance, said that while systems have improved, they can feel rigid at smaller scale.
“Larger companies have structured systems and teams to manage tax,” Sibiya said. “For SMEs, it is often one person managing everything, which makes the process significantly more demanding.”
What SARS collection figures indicate
SARS collection figure reflects stronger compliance and improved efficiency in tax administration, even as economic growth remains subdued.
The achievement follows years of institutional rebuilding, with SARS strengthening enforcement, refining data systems and widening the tax base.
“Collecting over R2 trillion is not an accident, but the outcome of the hard work of our employees who diligently perform millions of activities,” said Edward Keiswetter, Commissioner of the South African Revenue Service.
He added that the milestone reflects a tax system that is functioning more effectively and earning the trust of compliant taxpayers.
At a national level, the milestone reinforces fiscal stability at a time when revenue collection is under pressure. However, stronger collection does not necessarily signal a more supportive operating environment for businesses. In a low-growth economy, improved revenue performance often reflects tighter systems rather than expanding activity.
For small and medium-sized enterprises, that distinction matters. Many are already navigating rising input costs, delayed payments and uneven demand, all while remaining compliant within an increasingly efficient tax system.
Improved revenue collection is typically driven by better enforcement and more efficient systems, both of which are essential to a functioning tax authority. However, these gains are not experienced evenly across the business landscape.
For larger firms, compliance is embedded within established processes but for SMEs, it can add pressure in an already constrained environment, particularly when revenues are inconsistent and costs are rising.
