The fraudulent claim had been made earlier this year by a group of individuals representing a registered company in South Africa, spokesperson Luther Lebelo said in a statement.

"According to the company, they paid an amount of R266 230 423 to their employees and were seeking to claim this figure as a VAT refund. Suspecting fraudulent activities, Sars requested supporting documents. The documents confirmed that the refund was indeed fraudulent."

With the help of police, the group was arrested at the Sars head office in Pretoria on Wednesday on charges of fraud.

"Early indications suggest that the group’s alleged criminal activities are not solely limited to fraudulent VAT refunds, but also include building and company hijackings," Lebelo said.

"Sars is acutely aware of individuals and groupings who aim to defraud the country's tax system. Members of the public are reminded that Sars remains vigilant in detecting fraud and views such acts extremely seriously."

The tax authority appreciated working together with other law enforcement agencies in its efforts to protect South Africa and its citizens from organised crime and reducing illegal trade activities.

"Sars intends increasing such enforcement actions the regional level," he said.

On September 18, a Sars investigation uncovered an "organised" operation that fraudulently claimed more than R39m in false VAT refunds.

The two people identified as the alleged masterminds were a Cape Town businessman and an unregistered tax practitioner who was apparently a former Sars employee.

At the time Lebelo said Sars, the police and computer forensic specialists conducted search and seizures at seven premises in Cape Town on September 17.

"The investigation has revealed an organised attempt to obtain undue VAT refunds from Sars. The scheme utilised multiple corporate entities and individuals to extract over R39m in false VAT refunds," he said.

"Altogether, the perpetrators attempted to claim over R146m in VAT refunds, with R39m of that already paid out.

"The investigation is ongoing and more suspects could be identified at a later stage."

- News24.com