Africa-Press – South-Africa. The Supreme Court of Appeal (SCA) has upheld an appeal by the South African Revenue Service (SARS) against a ruling by the North Gauteng High Court, which had reviewed and set aside tax assessments raised against Absa and its subsidiary, United Towers.
In 2016, SARS began investigating a series of transactions Absa and its subsidiary were involved in during the 2015, 2016 and 2017 tax periods. After conducting an audit of these transactions in 2018, SARS issued a tax notice to the bank, saying it had participated in an “impermissible tax avoidance arrangement”.
Absa responded to SARS in February 2019, contending that the revenue authority had made an “error of law” and that it was not a party to a tax avoidance arrangement. In March 2019, SARS informed Absa that it would not withdraw its tax notices, saying it disputed the submissions made by the bank.
Towards the end of March 2019, Absa applied to the high court to review SARS’ refusal to withdraw its initial tax notices only for the revenue service to levy additional taxes on the bank under a different section of the income tax act. Absa then amended its initial review application to include the new tax assessments issued by SARS.
The high court found that the SARS tax assessments against Absa were unlawful and set them aside. However, the revenue authority applied for leave to appeal to the SCA, which ultimately found that the high court erred in finding that exceptional circumstances were present to entitle it to exercise jurisdiction in the tax dispute.
The SCA then set aside the high court ruling with costs.
“We note the decision and will comply with the ruling,” Absa said in a statement. “In the ordinary course of business, there are often differences in interpretation of complex tax matters and we will continue to engage SARS constructively on such matters.”
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