Asset management firm Coronation will have to convince the country’s apex court that the SA Revenue Service (Sars) was wrong in how it assessed its offshore operations, after the Raymond Zondo-led court decided to grant the company an audience in its dispute with the tax agency.
Coronation, which has R627bn in assets under management, said on Tuesday the Constitutional Court has decided that it will hear the group’s application for leave to appeal the decision by the country’s second-highest court, the Supreme Court of Appeals (SCA).
“On Friday, 1 September 2023, the Constitutional Court issued a directive that it will hear the company’s application for leave to appeal and hear arguments on the merits of the matter. The matter will be set down for hearing by the Constitutional Court in due course,” said the company.
The SCA found in February that Sars was within its rights to claim taxes from the Cape-Town based company for income earned by its Irish subsidiary, stretching back to 2012.
The decision by the SCA paved the way for Sars to claim additional taxes in respect of profits earned by international operations, together with interest and costs.
The tax bill is in the region of R800m.
The SCA had to determine whether the Irish Coronation group company had complied with all the requirements of the foreign business establishment (FBE) definition. To the extent that it did not qualify for the FBE exemption, the Coronation holding company in SA would have to impute profits of the Irish entity in its SA tax return.
These are some of the grounds with which the apex court will have to grapple when it adjudicates on the matter in a date yet to be announced.
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