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Sasfin Holdings Faces R4.8 Billion SARS Lawsuit Over Uncollected Taxes

Published February 28, 2024
4 months ago

South African financial services firm, Sasfin Holdings, is currently in a legal tangle with the South African Revenue Service (SARS) over a hefty R4.87 billion lawsuit. Sasfin's banking sector is in the spotlight after being hit with a civil summons encompassing a damages claim by SARS, which includes demands for outstanding income tax, Value Added Tax (VAT), interest, and legal costs. According to the announcement made by Sasfin via the JSE Securities Exchange News Service (SENS), SARS argues that the bank failed to secure tax payments from certain former foreign exchange clients.

However, the CEO of Sasfin Holdings, Michael Sassoon, has not only disputed these allegations but has also conveyed a strong position supported by legal advice suggesting that SARS's claim does not align with the principles of existing laws and stands a very slim chance of prevailing in court. He emphasized that the matter pertains to damages rather than the bank's tax obligations, making it evident that the crux of the matter revolves around the inability to recover taxes from former clients rather than the bank's tax compliance.

The roots of the dispute trace back to events from 2014, involving alleged collusion between former employees of Sasfin Bank and its then-clients, leading to criminal proceedings against the individuals involved. Despite the severity of the claim, Sassoon showcased unwavering confidence in the bank's position and its readiness to combat the charges laid out by SARS.

Amidst this controversy, President Cyril Ramaphosa made a significant decision to extend the term of office for SARS Commissioner Edward Kieswetter by an additional two years. This strategic move is opined to facilitate a well-organized leadership handover within the institution, keeping Kieswetter at the helm until the completion of his seven-year tenure which commenced in May 2019.

Kieswetter, who played an instrumental role in SARS's rehabilitation post its debilitating state capture period, will retain leadership, guiding the organization's strategic direction and ensuring a seamless transition of power. His reappointment comes at a critical juncture as it follows the repercussive actions taken against consulting firm Bain & Company for its flawed restructuring of SARS—an endeavor costing Bain & Company R217 million in repayments to the tax authority after the conclusive findings from the Sars Commission of Inquiry chaired by Judge Robert Nugent.

Sasfin Holdings has expressed its resoluteness to defend itself against the SARS claim, a legal battle Sasfin anticipates could be protracted over several years. Meanwhile, SARS's recent actions and leadership stabilization initiatives underscore a broader move towards bolstering the tax authority’s integrity, efficiency, and service to the South African public.

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