South Africa’s SMMEs remain far behind global standards for tax and compliance modernisation, despite the country’s elevated visibility as G20 host. Unconventional CA CEO Hiten Keshave says small businesses are struggling with manual processes, fragmented systems and high compliance costs that undermine growth.
Keshave points to findings from the OECD Tax Administration 2025 report, which shows that global tax authorities have already automated routine compliance, introduced pre-filled returns and deployed electronic verification systems.
In contrast, South African SMMEs still face manual VAT reconciliations, spreadsheet-based payroll files and complex tax clearance requirements.
In developed markets, filing VAT, payroll or corporate income tax has become a rapid review process.
Locally, the same tasks often take hours or days. For township businesses and informal traders, Keshave says the cost and complexity make compliance nearly inaccessible.
ESG pressure and governance gaps
Keshave adds that governance failures limit access to international investment. ESG criteria are becoming standard for global capital allocation, but South African businesses often fall behind on governance due to the lack of credible reporting systems.
Without reliable data and compliance processes, most SMMEs struggle to unlock green or impact-linked investment.
Planned SARS investment is positive but not sufficient
Government has allocated an additional R7.5bn to SARS over the next three years to improve systems and digitise administration.
Keshave says it is a necessary step, but warns that technology upgrades alone will not solve compliance failures unless SMMEs can access and use the digital tools.
UCA’s internal assessments highlight the scale of the problem. While 65% of SMMEs believe they are compliant, 75% fall short of governance and tax standards. Around 90% struggle with basic obligations due to outdated processes and limited access to affordable software.
Call for a digitised, accessible compliance framework
Keshave says South Africa’s path forward must include making digital accounting, payroll and invoicing tools accessible to all small businesses. Partial pre-filled VAT and corporate tax returns would reduce errors and administrative load.
Enterprise development programmes should include built in compliance support so that small firms can meet reporting requirements.
He says compliance rules should also be tiered by size, allowing smaller firms to follow simpler frameworks while larger companies meet more detailed standards. Enforcement should shift from punitive measures to proactive assistance through reminders, nudges and automation.
Pace remains the key challenge
Keshave acknowledges that South Africa has made progress, with e-filing and improved online channels forming a solid base. The issue is speed. While domestic reforms occur in intervals, global peers continue to advance rapidly.
He says SMMEs will not be able to compete internationally, access export markets or secure supply chain opportunities without reliable systems and digital tax readiness. Clean books and consistent reporting are now essential for growth.
“We owe entrepreneurs better by creating an enabling compliance environment, and we need to move faster,” Keshave says.
