Sasol has set aside nearly R3bn in its tax tussle with the SA Revenue Service (Sars) over the activities of its offshore treasury business unit.
The company’s financial statements for the year ended June show that the tax agency conducted an audit over a number of years on Sasol Financing International (SFI), culminating in Sars issuing revised tax assessments.
The group, which reported a R44bn loss in the year under review, reported a contingent liability of R2.87bn, including interest and penalties regarding the tax dispute.
“Sars dismissed Sasol’s objection to the revised assessments and Sasol appealed this decision to the tax court. In parallel, Sasol launched a review application in respect of certain elements of the revised assessments in respect of which the tax court does not have jurisdiction. Sasol also brought a review application against the Sars decision to register SFI as an SA taxpayer,” the financial statement reads.
“SFI and Sars have agreed that the tax court-related processes will be held in abeyance pending the outcome of the judicial review applications. The two review applications were heard in the high court on November 16 and 17 2022. On August 1 2023, the high court handed down its decision dismissing both the SFI review applications.
“SFI filed an application for leave to appeal the high court decision and a hearing date for this application will be set in due course.
“The review applications relate to the challenge by SFI of certain administrative decisions of Sars, and the high court decision does not directly affect the merits of the substantive dispute before the tax court, which remains in abeyance while the appeal of the review applications continues,” the statement reads.
Sasol, which has a global footprint, incorporated SFI in the Isle of Man to perform internal treasury functions including pooling foreign currency, extending loans to others in the group and investing surplus funds.
The dispute between Sasol and Sars centres on the tax agency’s decision to register SFI as an SA taxpayer in terms of the Tax Administration Act.
This is the decision, which gave rise to tax assessment for the tax year 2002 to 2012, that Sasol is seeking to have set aside.
Dispute
Sars has not shied away from pursuing corporations over taxes it believes they owe to the fiscus. AB InBev’s SA subsidiary, SA Breweries (SAB), this month said it had settled its tax dispute with Sars, agreeing to pay R4.5bn to state coffers.
The fight centred on the 2017 transaction in which AB InBev sold its stake in Coca-Cola Beverages Africa (CCBA) after its purchase of rival brewer SABMiller. About R3.5bn of the settlement has already been paid to Sars, with the remaining R1bn set to be paid in the coming months.
Sars is also pursuing multinational sportswear manufacturer Adidas over allegedly unpaid taxes amounting to R1.9bn, accusing it of underpaying customs duties over eight years.
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