The future of efiling and e@syFile: A commentary
While SARS already employs AI to auto-assess taxpayers, the pace of technological advancement, especially in the software industry, shows no signs of slowing. There’s a reason they say, “software engineers never sleep.” These tools are constantly evolving, reshaping how tax compliance is managed and monitored.
SARS recently revealed its ambitious vision: within five years, VAT201 returns will be auto-assessed. The future points to a centralised platform where sales and purchase data is seamlessly uploaded, enabling SARS to perform real-time VAT201 assessments on behalf of vendors.
But it doesn’t end there.
Given the limited number of reputable pharmacy chains across the country and the growing integration of taxpayer data, it is highly probable that these pharmacies will soon begin uploading records of prescribed medicine sales directly to a centralised system. This would mirror existing practices by medical aid schemes and insurers, who already submit data to SARS for tax purposes. As a result, out-of-pocket prescribed medical expenses may soon be automatically included in taxpayers’ returns.
This isn’t science fiction, it’s the very real and rapidly approaching future. We will witness this transformation in our lifetime.
With these relentless, dynamic developments—because software never stands still—we are reminded that there are now three certainties in life: death, taxes… and auto-assessment.
It is therefore unrealistic to assume that platforms like eFiling and e@syFile will remain untouched.
The inevitable question still looms:
What does the future hold for eFiling and e@syFile?
SARS has not been formally consulted on this matter.
It is important to consider that the development of the eFiling and e@syFile platforms has been a lengthy and complex process, marked by numerous challenges for both taxpayers and tax practitioners as they adapted to these systems.
Given this, it is likely that major changes may not occur within our lifetime. However, this should not be interpreted to mean that these platforms will remain unchanged or continue to exist indefinitely. The evolution of technology suggests otherwise.
The question: Is blockchain technology a future replacement for eFiling and e@syFile?
Blockchain technology-based tax system
Several international researchers[1] are currently exploring the potential use of blockchain technology in the field of taxation. The central question is not whether blockchain can be used, but when it should be applied for tax purposes. Ongoing research aims to assess how blockchain technology could improve tax administration, benefit taxpayers, and identify specific scenarios where its application would be most effective.
As Anoah et al. describe in their article, Blockchain technology integration in tax policy: Navigating challenges and unlocking opportunities for improving the taxation of Ghana’s digital economy: “Countries including Estonia, the United Arab Emirates (UAE), the United States, Australia, Singapore, and Switzerland have begun exploring the use of blockchain technology in their tax systems, particularly in relation to online businesses.” [2] (Anoah et al., 2024, p. 4)
The basics of blockchain technology
This brief does not aim to explain the fundamentals of blockchain technology, except to highlight the following key points:
Blockchain is a decentralised database of transactions distributed across a network of computers that participate in the system.
Information is grouped into “blocks”, which are linked together in a chronological and unalterable chain.
It is both transparent and secure: while anyone can view the ledger, no one can alter it once a transaction is recorded.
Unlike traditional banking systems, blockchain operates without a central authority. Instead, information is decentralised. So, when a new transaction is initiated, it is broadcast to all computers (nodes) on the network, which work to verify its validity through consensus.
Because every participant holds a copy of the blockchain and new entries require collective agreement, data cannot be easily tampered with or falsified.
All information stored on the blockchain is cryptographically secured, meaning it is protected using advanced encryption techniques that convert data into code to prevent unauthorised access or modification.
Importantly, Dennis Weber, editor of The Implications of Online Platforms and Technology for Taxation, explains in the book that the “use of blockchain technology for tax purposes requires additional tools and functionalities[3] such as smart cards and tokens.”[4] (D. Weber et al., 2023, p. 188).
Adam Hayes, in his online brief Blockchain, facts: what is it, how it works, and how it can be used, explains that “A smart contract is computer code embedded in the blockchain to facilitate transactions”. It runs on “predefined conditions agreed upon by users and executes transactions once those conditions are met.”[5] (https://www.investopedia.com/terms/b/blockchain.asp, accessed 18 May 2025).
In taxation, smart contracts can automate the calculation, withholding, and payment of taxes. In Blockchain Technology and the Future of Tax Administration: Opportunities And Risks, the editors explain that for example, “VAT can be computed and deducted at the point of sale. Vendors can use pre-filled VAT returns, while tax authorities process reimbursements faster, improving business cash flow” (L Judijanto et al., 2024, p. 299-310)[6].
Blockchain can also identify profits from transaction data and how they are distributed across business segments. While Dennis Post and Claudio Cipollini,in Fundamental Elements of a Blockchain-Based Tax System – When to Use Blockchain for Tax, further amplify on the usefulness of smart card when they said “Smart contracts can support, verify, or enforce agreements, which is especially useful in transfer pricing.”[7] (D.R. Post & C. Cipollini, 2024, page 535).
Regarding tokens, Dennis Weber in The implications of Online Platforms and technology for taxation explains that ”A token may represent anything of value – it is digitisation of value in tradeable units of account”[8]s. (D. Weber, 2023, p. 189).
For example, they can represent a store of value, digital or real-world assets such as property, art, goods in a supply chain and securities.
Subjective Requirements for the Use of Blockchain Technology
The effective adoption of blockchain technology for tax purposes hinges on several subjective factors, including:
Voluntary taxpayer participation and compliance with the new system
An intuitive, accessible user interface for all users
Strong safeguards for taxpayer rights and data privacy
Digital inclusivity, ensuring participation by all stakeholders. The high technology costs is a prohibitive factor since currently the cost of using efiling and e@syFile is borne by SARS. These software are used to submit tax returns.
Over the past two filing seasons, a number of South African taxpayers had their e-filing profiles hijacked. While these incidents have not yet caused widespread distrust in the software, their continued occurrence could quickly erode public confidence in the tax administration system. Given this, what guarantees that blockchain technology is truly foolproof?
Stakeholder Perspectives: Revenue Authorities
Revenue authorities will need to adapt to the high volume of transactions enabled by the large volume of complex tax transactions, which will require significant upgrades to their digital infrastructure and strategies.
Blockchain offers the ability to integrate and share information across different tax domains. For example, documentation submitted for transfer pricing purposes could also inform VAT assessments, promoting greater consistency and efficiency.
The technology ensures data integrity through tamper-proof records, which can enhance trust in the information being used. Additionally, blockchain can play a key role in reducing fraud by making unauthorised changes to data virtually impossible.
Blockchain also offers the possibility for faster and better audit outcomes in a near real-time situation. However, it depends on whether the tax authorities are allowed to participate as a node – that is, when a tax authority has its node (device) in the network.
Stakeholder Perspectives: Taxpayers
Cost considerations are in the centre of considerations for taxpayers, as currently they are not required to pay for the software used to submit tax returns. At this early stage it is unclear who would bear the cost of implementing and maintaining blockchain technology for tax purposes.
In general, the costs associated with blockchain technology are typically borne by the entities that initiate transactions. Dennis Post and Claudio Cipollini, in Fundamental Elements of a Blockchain-Based Tax System – When to Use Blockchain for Tax, make a critical point that under these circumstances, the high cost associated with blockchain usage may require that “taxpayers must be incentivised to use it”[9]. (D.R. Post & C. Cipollini, 2024, p. 547).
The cash incentives should help cover expenses related to computational power, data storage, transaction validation, and the recording of information on the blockchain, especially if the use of blockchain technology is not legally binding.
Towards a balance sheet
It must not be forgotten that the introduction of eFiling and e@syFile marked a significant leap in software development, representing a major leap forward from the days of manually submitted tax returns.
Blockchain technology is inherently complex and demands specialised knowledge and skills, resources that are still lacking in many revenue authorities, not to mention among taxpayers and tax practitioners. A successful transition to blockchain-based tax administration would require substantial investment in training and education.
Although blockchain offers enhanced security and tamper-resistance, it is not immune to cyberattacks. No system can guarantee absolute protection against fraud. Consider the RMS Titanic, an engineering marvel of its time, believed to be unsinkable, yet it tragically sank on its maiden voyage in 1912. If such a technologically advanced vessel could fail, why should we assume that any computer software is truly impenetrable?
While South Africa’s journey to freedom was considered long, the path toward fully integrating blockchain technology into its tax system is likely to be even longer.
Despite all that has been discussed in this article, the future of tax administration—at least in its current form—remains uncertain. After all, nothing is cast in stone!
References
D.R. Post & C. Cipollini, Fundamental Elements of a Blockchain-Based Tax System – When to Use Blockchain for Tax?, 14 World Tax J. 4 (2022), Journal Articles & Opinion Pieces IBFD, https://doi.org/10.59403/2j075wb.
D. Weber (Ed.), Preface in The Implications of Online Platforms and Technology for Taxation (2023), Books IBFD, https://doi.org/10.59403/3r0nqgv.
L Judijanto, I W Budiaji, E Fkun: Blockchain Technology and the Future of Tax Administration: Opportunities and Risks. Prosiding Seminar Nasional Indonesia Vol. 2 No. 2 Juni 2024, hal., 299-310 e-ISSN: 3026-5169
Sampson Anomah *, Boadu Ayeboafo, Maurice Aduamoah, Owusu Agyabeng: Blockchain technology integration in tax policy: Navigating challenges and unlocking opportunities for improving the taxation of Ghana’s digital economy. Scientific African: Scientific African 24 (2024) e02210
Acknowledgement
Permission to cite extract from the publishers of the book, The Implications of Online Platforms and Technology for Taxation (2023), Books IBFD, was received on 4 June 2025.
[1] Claudio Cipollini and Dennis Post: based at CPT project at the University of Amsterdam.
[2] Anoah, S., Ayeboafo, B., Aduamoah, M., & Agyabeng, O. (2024). Blockchain technology integration in tax policy: Navigating challenges and unlocking opportunities for improving the taxation of Ghana’s digital economy. Scientific African, 24, e02210.
[3] Weber, D. (Ed.). (2023). The Implications of Online Platforms and Technology for Taxation. IBFD. https://doi.org/10.59403/3r0nqgv. P188
[4] Ibid
[5] https://www.investopedia.com/terms/b/blockchain.asp (accessed 18 May 2025)
[6] Judijanto, L., Budiaji, I. W., & Fkun, E. (2024). Blockchain Technology and the Future of Tax Administration: Opportunities and Risks. Prosiding Seminar Nasional Indonesia, 2(2), 299–310. e-ISSN: 3026-5169.
[7] FHayes, A. (2025). Blockchain, facts: What is it, how it works, and how it can be used. Investopedia. Retrieved May 18, 2025, from https://www.investopedia.com/terms/b/blockchain.asp. Page 535
[8] Weber, D. (Ed.). (2023). The Implications of Online Platforms and Technology for Taxation. IBFD. https://doi.org/10.59403/3r0nqgv. Page 189
[9] Post, D. R., & Cipollini, C. (2024). Fundamental Elements of a Blockchain-Based Tax System – When to Use Blockchain for Tax? World Tax Journal, 14(4). https://doi.org/10.59403/2j075wb. Page 547