Sasol turns to courts after Sars slaps it with tax bills worth R12.8bn

JSE-listed energy and chemicals group Sasol will approach the Supreme Court of Appeal (SCA) to resolve a tax dispute with the South African Revenue Service (Sars), which has slapped it with assessments for outstanding tax liabilities and penalties worth R12.8-billion.

The company made a R1.2-billion provision in its 2017 financial statements for tax liabilities that could flow from an adverse Tax Court finding of June 30, relating to international crude oil procurement activities between 2005 and 2012. Sasol procures crude oil for processing in the Natref refinery, in the Free Sate.

It also reported on Monday that the judgment, together with other tax principles raised by SARS in relation to Sasol Oil’s crude purchases in 2013 and 2014, could result in a further tax exposure of R11.6-billion. It said this could give rise to a further contingent liability.

CFO Paul Victor stressed, however, that the group did not agree with either the judgment or the assessments and that it planned to defend itself in the courts.

On August 14, the Tax Court granted Sasol Oil leave to appeal directly to the SCA, while the company had also raised objections directly with Sars relating to the assessments, after having recently been issued with demand-for-payment notices for both the R1.2-billion and the R11.6-billion assessments.

Following high-level interactions, Sars suspended the payments and the two parties agreed to allow the dispute to be resolved legally.

“We believe we have a strong case,” Victor told Engineering News Online, indicating that, should the matter dealing with the period from 2004 to 2012 be resolved, it would reverse the R1.2-billion provision on its accounts. A favourable judgment would also have a direct bearing on the R11.6-billion assessment.

No date had yet been set for the SCA to hear the matter. “Hopefully, within the next 12 months this case will serve in front of the Supreme Court,” Victor said.

Sasol says the large assessment amounts have arisen because of the Tax Court’s determination to disallow all costs associated with Sasol Oil’s crude purchases and to only tax the revenue. In other words, none of the crude procured was allowed as a deduction.