Point of view: understanding the impact of eFiling fraud on South African taxpayers

The latest findings from the Tax Ombud’s eFiling Profile Hijacking survey paint a stark picture of the vulnerabilities within South Africa’s tax system.

The Tax Ombud, Yanga Mputa, presented these findings this week.

The numbers alone tell a worrying story: nearly half of the respondents were registered tax practitioners, while a significant portion, 32.7%, were individual taxpayers.

The hijacking of tax profiles is not a minor inconvenience; it is a direct assault on the integrity of Sars, the security of taxpayers, and the trust that businesses and individuals place in the tax system. Alarmingly, a significant portion of those surveyed had firsthand experience with eFiling hijacking, with 41% reporting that they encountered this form of fraud.

Meanwhile, 38% of tax practitioners had clients who fell victim to it, and 21% had witnessed it happening to someone else. These figures highlight that this is not a niche issue affecting a handful of unlucky taxpayers—it is widespread and systemic.

The types of tax affected provide further insight into the nature of these attacks. Personal Income Tax was the primary target, making up 65% of reported cases, followed by VAT at 20% and Company Income Tax at 15%. This underscores the fact that individuals, rather than corporations, bear the brunt of eFiling fraud.

The financial implications are severe: fraud amounts ranged from sums below R10 000 to staggering figures exceeding R1 million. For many victims, this is not just a bureaucratic headache, it is financial devastation.

What is even more concerning is the response-or lack thereof—from authorities. More than half (52%) of the respondents did not report the matter to the police, and an additional 23% did not even know if they should. This raises critical questions about law enforcement’s ability to assist victims and deter perpetrators. Even among those who did report their cases, the question remains: What action, if any, was taken?

The survey further reveals the enabling factors behind these fraudulent activities: internal fraud and insider involvement, a lack of cybersecurity safeguards, system vulnerabilities, and ineffective response mechanisms from Sars itself.

The fraudulent modification of banking details adds another layer to the crisis, demonstrating how easily financial data can be exploited. There is an urgent need for improved security measures and greater education and awareness of the risks.

Sars, the institution tasked with protecting taxpayers, does not emerge unscathed from this report. While 71% of respondents attempted to report their cases to Sars, only 11% found the response to be effective. A staggering 89% of those affected indicated that Sars’ intervention did little to resolve the issue. The failures range from a lack of communication and responsiveness to inefficiency and delays.

Improved security measures, more thorough investigations, and a strengthened customer support framework should be the starting point. The most damning statistic of all is the assessment of Sars’ communication and interaction following the discovery of fraud: 82% of respondents found it inadequate and ineffective.

The victims of eFiling hijacking deserve better, swift action, transparency, and assurance that their financial records are secure. The findings of the survey make it clear: eFiling hijacking is a pressing issue that demands immediate attention. Addressing this challenge effectively is crucial to maintaining confidence in the tax system and ensuring taxpayers feel secure. Sars has an opportunity to strengthen its processes, enhance its responsiveness, and implement robust measures that protect individuals and businesses alike. By taking decisive action, it can reaffirm public trust and demonstrate its commitment to safeguarding taxpayer information. A proactive and transparent approach will go a long way in preventing further exploitation and ensuring the integrity of the system.

* Maleke is the editor of Personal Finance

PERSONAL FINANCE