On Tuesday, financial services firm Sasfin Holdings found itself embroiled in a legal dispute as it received a civil summons from the South African Revenue Service (SARS) amounting to R4.9 billion plus interest and costs.
SARS issued a damages claim against Sasfin, alleging the firm’s banking arm failed to collect income tax, VAT, and penalties from former clients or violated foreign exchange and anti-money laundering regulations.
Sasfin vehemently denies these charges, emphasizing that the summons pertains to SARS’ alleged inability to collect taxes from former foreign exchange clients who operated unlawfully.
According to Sasfin, former foreign exchange clients operated as a syndicate to expatriate money out of South Africa unlawfully. These clients allegedly colluded with former employees who operated beyond the scope of their employment.
Sasfin asserts that it took decisive action upon discovering this scheme, terminating relationships with implicated clients and employees and initiating criminal proceedings against them.
Legal Stand and Future Proceedings
Sasfin asserts that the SARS claim is legally unfounded, emphasizing that it falls outside recognized parameters of applicable law and has a minimal likelihood of success. The claim pertains to the expatriation of money dating back to 2014.
Sasfin CEO Michael Sassoon affirmed the company’s intention to vigorously defend the matter, highlighting the injustice of holding banks liable for taxes clients fail to pay.
SARS confirmed instituting legal proceedings against Sasfin, citing a thorough investigation into taxpayers who concealed true and accurate tax disclosures.
Commissioner Edward Kieswetter refrained from commenting on liability and compensation, asserting that these are legal matters before the South African judicial system.
Amidst the legal battle, President Cyril Ramaphosa extended Commissioner Edward Kieswetter’s term for an additional two years. Kieswetter, appointed in March 2019, has been credited with revitalizing SARS following challenges during the state capture era.
As Sasfin braces for a protracted legal battle, the implications of this dispute extend beyond the company to broader issues of tax compliance and regulatory oversight. With SARS’ legal proceedings underway and Kieswetter’s continued leadership, the outcome of this case will shape future dynamics within the financial and regulatory landscape of South Africa.