Categories: GovernmentNews

SARS Launches Legal Action Against Sasfin Bank for Tax Evasion

  • SARS, led by Commissioner Edward Kieswetter, has initiated legal proceedings against Sasfin Bank due to allegations of tax evasion stemming from a comprehensive investigation into South African taxpayers' inaccurate tax disclosures.
  • Sasfin Bank's former foreign exchange clients are accused of colluding in an illicit scheme to expatriate funds from South Africa, prompting SARS to pursue a significant damages claim against the bank for alleged inability to collect income tax, VAT, and penalties from these clients.
  • Despite Sasfin Holdings Limited's assertion that SARS's claim lacks merit and legal basis, the bank is prepared to defend itself in court, setting the stage for protracted legal proceedings with potential implications for South Africa's financial regulatory landscape.
Published by
Miriam Matoma

In a significant development impacting South Africa’s financial landscape, the Commissioner for the South African Revenue Service (SARS), Edward Kieswetter, has confirmed the initiation of legal proceedings against Sasfin Bank. This move comes in the wake of a comprehensive investigation conducted by SARS into numerous South African taxpayers who allegedly failed to provide accurate tax disclosures.

The investigation uncovered a concerning pattern wherein taxpayers collaborated to transfer funds offshore, employing tactics that obfuscated the traceability of these transactions, thereby endangering the recovery of taxes within South Africa. Speaking on the matter, the Commissioner refrained from commenting on issues of liability and compensation, citing their sub judice status before the South African judicial system. This prudent approach underscores SARS’s commitment to due legal process and transparency.

Addressing the media, the Commissioner reiterated SARS’s unwavering dedication to enforcing tax compliance impartially, emphasizing the crucial role such measures play in upholding the integrity of South Africa’s fiscal framework.

Simultaneously, Sasfin Holdings Limited, through an official announcement, disclosed that its subsidiary, Sasfin Bank, had been served with a civil summons totaling a substantial amount, accompanied by claims of interest and costs, by SARS. The summons stems from SARS’s alleged inability to recover income tax, value-added tax (VAT), and penalties purportedly owed by former clients of Sasfin Bank’s foreign exchange division.

According to the statement released by Sasfin Holdings Limited, the clients in question were involved in an illicit syndicate aimed at facilitating the unlawful expatriation of funds from South Africa, in collusion with former employees who operated beyond the bounds of their employment mandates. The announcement further elucidated the proactive measures taken by Sasfin Bank upon discovering the illicit scheme, including the termination of relationships with implicated parties and the initiation of criminal proceedings against them.

Following the receipt of the summons, Sasfin Bank collaborated transparently with regulatory authorities and sought legal counsel from reputable sources. Notably, a legal opinion obtained from ENS, authored by distinguished legal experts, indicated that SARS’s claim fell outside the established legal parameters and bore minimal prospects of success. Based on this assessment, Sasfin Holdings Limited expressed confidence that the claim would not result in any financial liability.

Despite assertions from Sasfin Holdings Limited regarding the lack of merit in SARS’s claim, the Board of Directors remains prepared to contest the legal proceedings. Given the anticipated timeline for a defended trial action, it is anticipated that the matter will undergo protracted legal proceedings, potentially spanning several years.

This development underscores the intricate interplay between regulatory bodies, financial institutions, and legal frameworks within South Africa’s economic landscape. As the case unfolds, stakeholders will keenly observe its implications for tax compliance, financial accountability, and the broader pursuit of fiscal integrity within the nation.

In conclusion, the initiation of legal proceedings against Sasfin Bank by SARS marks a pivotal moment in South Africa’s ongoing efforts to safeguard its fiscal interests and uphold the principles of transparency and accountability within its financial sector.


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Miriam Matoma

Miriam is a freelance writer, she covers economics and government news for Rateweb. You can contact her on: Email: Twitter: @MatomaMiriam