The fiscus is set to net R4.5bn from AB InBev’s SA subsidiary, SA Breweries (SAB), after the SA Revenue Service (Sars) and the brewer settled their tax dispute.
The fight centred on the 2017 transaction that saw AB InBev sell its stake in Coca-Cola Beverages Africa (CCBA), following its purchase of rival brewer SABMiller.
This is after the tax agency initially demanded R17.7bn from SAB, which it disputed. On Thursday, the company said R3.5bn of the settlement had already been paid to Sars.
“The assessment from Sars claimed that SAB owed R6.4bn in taxes plus penalties and interest, which at the time of assessment totalled R17.7bn. The repurchase transaction also included an indemnity for certain tax liabilities of CCBA,” AB InBev said in its results presentation.
“CCBA notified SAB that CCBA had received an assessment from Sars for R8.9bn. Both of these assessments were contested.
“Both disputes have now been resolved and SAB will pay R4.5bn in respect of these SA tax matters to Sars, of which R3.5bn has been paid as of June 30 2024.”
Coca-Cola and AB InBev, the world’s largest beer maker, agreed on the transfer of InBev’s 54.5% stake in CCBA in 2017, in a $3.1bn deal.
According to CCBA’s website, it is the eighth-largest Coca-Cola bottling partner worldwide by revenue and the biggest on the continent, accounting for about 40% of all Coca-Cola volumes sold in Africa. It employs 17,000 people at its 40 bottling plants.
The market is waiting in anticipation for when CCBA will list on the JSE. The planned initial public offering by CCBA was first mooted in April 2021, with the shares to be listed in Amsterdam and Johannesburg. Coca-Cola is said to be targeting a value of $8.1bn, according to Bloomberg.
But the group has delayed the listing, telling Business Day earlier in 2024 that the listing would happen when “market conditions become more favourable”.
AB InBev said in its second quarter results that its SA business saw volumes grow by mid-single digits, outperforming the industry in both beer and beyond beer, according to its estimates.
“The momentum of our business continued, with our portfolio delivering record high volumes and gaining share of both beer and total alcohol, according to our estimates. Our performance in the first half of 2024 was led by our above core beer brands, which grew volumes by mid-teens driven by Corona and Stella Artois, and the continued volume growth of our core portfolio,” it said.
“In Africa excluding SA, beer volumes grew by high-teens in Nigeria, cycling a soft industry in the first half of 2023. In our other markets, we grew volumes in aggregate by low-single digits in the first half of 2024, driven primarily by Tanzania, Zambia and Uganda.”
The group said its business operations continued to be negatively affected by risks associated with global, regional and local economic weakness and uncertainty.
“Consumption of beer and other alcohol and non-alcohol beverages in many of the jurisdictions in which AB InBev operates is closely linked to general economic conditions and changes in disposable income,” it said.
“Difficult macroeconomic conditions in AB InBev’s key markets have adversely affected the demand for AB InBev’s products in the past, and may in the future have a material adverse effect on the demand for AB InBev’s products, which, in turn could result in lower revenue and reduced profit.”
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