Sasfin Holdings, a financial services company, announced on Tuesday that the SA Revenue Service (Sars) had sent its banking division a civil summons for R4.9 billion, plus interest and charges.
It claimed that the revenue agency had issued the summons in the guise of a damages claim because Sasfin had been unable to collect income tax, VAT, and penalties from former customers of the company’s banking division or had gotten around foreign exchange and anti-money laundering laws—a statement that the company vigorously contests.
In a statement posted on the JSE news service SENS, Sasfin stated, “This summons relates to Sars’ purported inability to collect income tax, VAT, and penalties allegedly owed by former foreign exchange clients of the bank.”
It claimed that former Sasfin foreign exchange clients collaborated with former bank employees who, according to the report, worked outside the bounds of their employment to run an illegal plan to enable the expatriation of money out of South Africa. The syndicate operated as a whole.
The corporation claims that after learning of this illegal scheme, its bank acted swiftly and launched a thorough investigation under the direction of a separate forensic agency.
“As a result, criminal cases were filed against the implicated clients and employees, and their relationships were terminated.”
In support of its allegation that the SARS demand is “outside the recognised parameters of applicable law and has a very remote likelihood of success,” Sasfin said, stating that it has since sought legal opinion.
The money was expatriated in 2014, according to the lawsuit.
“We are certain that the Sars assertion is unfounded. We intend to vigorously fight the case, as stated in the notification we have filed. Michael Sassoon, CEO of Sasfin, stated, “It is unfair for banks to be held accountable to Sars for taxes their clients have neglected to pay.”
It’s crucial to remember that this is a damages claim rather than a tax claim, and it has nothing to do with Sasfin’s personal tax situation. The claim, which we categorically deny, will likely result in a drawn-out trial action that takes several years to resolve, according to Sassoon.
Sars has acknowledged that it filed a lawsuit against the bank.
“South African taxpayers who had not provided Sars with true and accurate tax disclosures were the subject of a comprehensive inquiry by Sars. According to Sars, the inquiry showed that the taxpayers had conspired to transfer money abroad in a way that made it difficult to track down the transferred cash and endangered South Africa’s ability to collect taxes.
As these are legal matters currently before the South African judicial system, it was said that commissioner Edward Kieswetter held the opinion “that it is inappropriate to comment on the question of liability and compensation for the fiscus’ loss.”
President Cyril Ramaphosa extended the Sars commissioner’s tenure earlier on Tuesday by an additional two years.
Following an agreement between Kieswetter and Ramaphosa “to enable an orderly leadership transition in the organization,” the Presidency declared that Kieswetter will remain in office for an additional two years.
Kieswetter began serving in May 2019 after being appointed in March 2019 for a five-year term.
The Presidency stated, “Mr. Kieswetter will continue leading the execution of the revenue service’s strategic direction while ensuring a smooth leadership transition.”
The commissioner is recognized for having saved the organization from complete collapse during Tom Moyane’s state capture years.
According to the final findings of the Sars Commission of Inquiry, which was chaired by retired judge Robert Nugent, consulting company Bain & Company was ultimately required to repay income for its disastrous restructuring of the tax agency, plus interest totaling R217 million.
It’s known that Kieswetter had subtly conveyed his wish to depart Sars, but Ramaphosa took action to extend his tenure.
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