SARS has a new plan to get R300 billion more in taxes through a national crackdown

The South African Revenue Service (SARS) is moving forward with its plan to crack down on illicit trade, with the taxman looking to introduce a new product verification system that will allow consumers to check whether products are legitimate.

South Africa’s illicit economy is estimated by SARS to be worth as much as R1.2 trillion, or 15% of the country’s total GDP.

This represents an additional tax revenue of up to R300 billion that the country is missing out on every year, as traders of these goods do not pay tax on them.

Tackling this illicit trade has thus been designated a top priority by the newly appointed SARS Commissioner, Dr Johnstone Mabhuku.

Carrying on the work of former Commissioner Edward Kieswetter, Mabhuku said the entity would continue carrying out its National Illicit Economy Disruption Plan.

As part of the plan, SARS has partnered with the National Consumer Commission (NCC) to propose the introduction of a new product verification system.

UCT School of Economics Professor Corné van Walbeek told 702 that the new system would allow consumers to scan products using their phone to see if they are legitimate.

“Basically, how it works is you put a stamp onto the product, which has a unique code,” explained Van Walbeek. “It can be thought of as a bar code, or it could be a QR code.”

“But there could be much more sophisticated ways to track where that individual product has come from, and also where it should be going.”

Van Walbeek explained that many other countries, such as Turkey and Kenya, had adopted similar track-and-trace systems in recent years for products like alcohol and tobacco.

The trade of illegal tobacco saw a particular surge in 2020 following the ban on cigarettes during the Covid-19 pandemic, and since then has grown to account for around 60% of all cigarette sales in the country.

It is estimated that some 37 billion cigarettes were smoked by South Africans in 2023, with SARS collecting tax on only 13 billion of these.

Ending illicit trade requires collaboration

President Cyril Ramaphosa first touched on the National Illicit Economy Disruption Plan during his State of the Nation Address in February 2026.

The plan entails a collaborative effort between SARS and various enforcement agencies, including the Border Management Authority (BMA) and the South African Police Service (SAPS).

It also included the recent signing of a Memorandum of Understanding between SARS and the NCC to facilitate greater cooperation between the two entities in combating illicit trade.

The participation of the NCC in the plan’s rollout has been described by Van Walbeek as “peculiar”, as the organisation is not typically concerned with issues of a criminal nature such as illicit trade.

Responding to this in an interview with Moneyweb, NCC Acting Commissioner Hardin Ratshisusu said the impact of illicit goods on consumers necessitated their participation.

He explained that Section 24 of the Consumer Protection Act regulates trade descriptions, requiring suppliers to clearly state where products are produced and the components used.

“We do a lot of inspections, and we are finding products that we cannot trace,” Ratshisusu said. “We don’t know where they are coming from. Those products could even include cigarettes.”

“That’s why we are proposing in our plan through the Minister of Trade, Industry and Competition that there should be a regulation for track-and-trace from a consumer protection point of view.”

Ratshisusu stressed that the NCC’s intervention was not meant to serve as a substitute for the legal obligations carried by SAPS and the BMA in stopping illicit trade.

However, he said the NCC also had a legal obligation to uphold consumer protection laws, and that the rolling out of the new track-and-trace system would assist them in doing so.

Appearing before the Standing Committee on Finance on 13 May, Mabhuku said the new track-and-trace system was in the works, with the hopes of a potential rollout later this year.