Written comments on the 2026 draft TLAB and TALAB must be submitted to the National Treasury and SARS by close of business on 28 August 2026.
In a statement, Treasury said the 2026 Draft TLAB and Draft TALAB respectively provides the necessary legislative amendments required to implement the tax announcements, and legislative amendments dealing with tax administration as announced in the 2026 Budget Review, as well as technical corrections.
Besides giving effect to proposals in the 2026 Budget, the publication of the draft bills provides an opportunity for public consultation, ensures clarification in certain instances and includes administrative improvements.
Important Income Tax and VAT Proposals
The accompanying Explanatory Memorandum on TLAB covers proposed amendments relating to income tax affecting individuals, savings and employment, businesses in general, business incentives, financial institutions, international tax matters, VAT and the Carbon Tax Act.
Key tax proposals contained in the 2026 Draft TLAB include:
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Limiting the donations tax exemption rules where a spouse is a non-resident
It is proposed that a limitation be introduced on the inter-spousal donations tax exemption. Specifically, the exemption will apply only to donations made to a spouse who is a South African tax resident. This proposal aims to stop spouses from deliberately staggering their cessation of tax residence to avoid paying donations and capital gains tax.
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Special Economic Zones (SEZ): introduction of domestic transfer pricing rules
It is proposed that the anti-profit shifting rule be replaced with the arm’s length principle in respect of domestic transactions between SEZ companies qualifying for the 15 percent corporate income tax rate and related companies outside the SEZ.
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Extending eligibility for medical scheme fees tax credit and additional medical expense tax credit to members of restricted medical schemes
The proposal is to introduce a definition of “restricted medical scheme” for tax purposes to accommodate certain statutory medical schemes that fall outside the regulatory oversight of the Council for Medical Schemes due to legislative exclusion.
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Aligning the interaction between Controlled Foreign Company (CFC) and Domestic Treasury Management Company (DTMC) currency translation rules
It is proposed that amendments will come into operation on 1 January 2027.
Enhancing Tax Administration
National Treasury highlights the following key tax proposals contained in the 2026 Draft TALAB:
- Expanding documentary requirements for second-hand goods
To mitigate the risk of fraudulent notional input tax claims, it is proposed that the documentation requirements for second-hand goods vendors be extended to align to those prescribed under the Second-Hand Goods Act and its regulations.
- Permitting pre- or post-deposit screening of refunds by banks
Banks are required to report suspicious tax refunds for up to two business days while SARS investigates. The proposed amendment aims to explicitly permit pre- or post-deposit screening of refunds by banks to enable a smoother refund process.
- Amendment of section 256 of Tax Administration Act, 2011
Section 164(6) of the Tax Administration Act suspends the taxpayer’s obligation to pay tax pending SARS’ decision on the suspension of payment request. In terms of section 256 of the Act, a taxpayer must be indicated as “tax compliant” during this interim period. Section 256 of the Act does not provide for a scenario where a taxpayer’s obligation to pay tax is automatically suspended pending the outcome of a request for remission of penalties in accordance with section 215(3) of the Act. The proposed amendment aims to address this anomaly.
Following the public consultation process, National Treasury and SARS will consider the submissions received before finalising the legislation for introduction in Parliament.
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