New laws give SARS more power over money in your bank accounts in South Africa
New tax legislation could require banks to help the South African Revenue Service (SARS) identify and temporarily freeze funds and payments to taxpayers in South Africa.
The proposed changes form part of the 2026 Draft Tax Administration Laws Amendment Bill (TALAB), which was published for public comment alongside the Draft Taxation Laws Amendment Bill.
According to Tax Consulting South Africa, the amendments would give banks a formal role in SARS’ efforts to combat tax fraud by allowing them to screen tax refund payments before or after they are deposited into taxpayers’ accounts.
The proposal would amend Section 190 of the Tax Administration Act to explicitly permit banks to identify refunds they reasonably suspect are linked to a tax offence.
If a bank flags a payment, it would be required to report the matter to SARS and temporarily hold the refund for up to two business days while the revenue service investigates its legitimacy.
Tax Consulting SA said the proposal effectively extends SARS’ fraud-detection powers beyond the tax authority itself.
“This bold compliance move, aligning with SARS’ success on stopping fraudulent VAT refunds specifically, can be construed as SARS extending its fraud-detection ‘discretion’, and refund freezing powers, to financial institutions.”
The firm explained that SARS is already working with banks to explore screening refunds before they reach taxpayers’ accounts, with the aim of preventing fraudulent payments while ensuring legitimate refunds are paid more quickly.
The proposal builds on SARS’ existing powers to recover refunds it believes were paid incorrectly.
SARS can already issue additional assessments, conduct audits or verification processes and use various recovery mechanisms provided for in law.
Under the draft amendment, banks would serve as an additional checkpoint, identifying potentially suspicious refund activity before the money is freely available. However, Tax Consulting SA noted that one important question remains unanswered.
“Although a proactive move to aid in recouping fraudulent refunds paid out, and adding an additional layer of security for fiscal funds, there is no further guidance on what matrix will be used by banks to determine the risk of the deposit amount being linked to a tax offence.”
The proposed changes come during the current tax filing season, as SARS continues warning taxpayers about increasingly sophisticated refund scams.
Crackdown on fraud
Fraudsters have been sending fake emails and SMS messages claiming recipients are due tax refunds while directing them to fraudulent websites designed to steal personal and banking information.
Tax Consulting SA said criminals are increasingly using artificial intelligence to create convincing communications that are difficult to distinguish from genuine SARS correspondence.
SARS has repeatedly stressed that it will never ask taxpayers to provide passwords, one-time PINs, banking PINs, or eFiling login details via email, SMS, social media, or telephone calls.
The proposed amendments also follow recommendations made by the Office of the Tax Ombud in its draft report into alleged eFiling profile hijacking.
The report found that criminals often change banking details on compromised taxpayer profiles before submitting fraudulent tax returns to generate illegal refunds, sometimes worth as much as R100,000, while keeping amounts low enough to avoid detection.
The Ombud concluded that preventing this type of fraud requires cooperation between SARS, banks, tax practitioners, law enforcement agencies and other stakeholders.
National Treasury said the draft tax bills contain the legislative amendments needed to implement tax measures announced in the 2026 Budget Review.
It also includes various tax administration changes and technical corrections. Public comments on the draft legislation must be submitted to the National Treasury and SARS by 28 August 2026.
Tax Consulting SA said the effectiveness of the proposed system will ultimately depend on how clearly banks are guided when deciding whether to flag refunds as suspicious.
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