AMS CHALLENGES SRA’S E2.2M TAX LIABILITY

MBABANE – AMS Building Contractors wants the High Court to review the decision of the commissioner general of the  Eswatini Revenue Authority.

The company decided to approach the High Court for its intervention after SRA demanded a sum E2 259 069 in respect of tax liability. 

The company further seeks an interdict against Eswatini Revenue Authority (SRA) Commissioner General Dumisani Masilela, who is cited as the respondent, from refusing to issue a tax compliance certificate as a result of the disputed liability. 

The second part of the application is for final relief that the liability imposed by SRA was incorrect or that there was no tax liability due to the respondent as, among other things, the company filed an objection with SRA which was allowed in terms of the law. 

In the application which has been filed under the certificate of urgency, the company’s Public Officer Carlos Dos Santos said the outcome or finding in respect of the abovementioned ground, is that the company is not liable for the tax of E2 259 069.48 levied by the SRA upon the applicant.

A public officer is the representative taxpayer for a company, and therefore that person will serve as the face of the company for tax purposes. All actions carried out in his capacity as a public officer are deemed to have been done by the company. 

On or about June 2020, it is purported that SRA conducted a VAT audit  the company and the outcome of same, was to the effect that there were certain variances that existed between the VAT turnover and Income Tax turnover for the years ended 2015, 2016, 2017 and 2018. 

It was also stated in the application that a desk audit letter was served upon the company on or about June 19, 2020. 

turnover

“In terms of such outcome letter, the Respondent found that there was a variance between VAT turnover and Income Tax turnover for the year 2015 amounting to E8 964 561.41 and immediately imposed a penalty fixed at 80 per cent. In terms of such outcome letter, the Respondent made a determination of a tax liability, of (inclusive of interest) E2 259 069.48,” reads the application. 

These are allegations contained in an affidavit whose veracity is still to be tested in court and SRA is yet to file opposing papers.

Carlos said before SRA issued the desk audit outcome letter, and during the course of the audit, SRA’s audit team raised its concerns regarding the preliminary findings on the variances. The company’s pubic officer mentioned that after SRA’S audit team raised its concerns regarding the preliminary findings of such variance, the issue was extensively dealt with between the parties through emails that were exchanged from on or about February 2020 to on or about June 2020. 

“In terms of such emails exchanged between the parties, the Respondent’s audit team advised the applicant to write a letter to the Commissioner General and apply for his permission to amend its 2015 returns,” said Carlos. 

He said that this advice from SRA was due to the fact that it was common cause between parties that the huge variance was caused by the filing and consideration of unaudited financial statements for the Corporate Income Tax (CIT) year 2015. 

He said the company did apply to SRA on or about June 4, 2020 to amend its 2015 CIT Return and such application was accordingly received by SRA. It was stated that the latter approved such request on or about June 9, 2020, thus allowing the company to amend its 2015 CIT Return and the Return was accordingly amended during the course of the audit and furnished to SRA. 

However, Carlos mentioned through the application that despite SRA having allowed the company to amend its 2015 CIT Return, and SRA having been furnished with such amended Tax Return, it neglected or disregarded the amended CIT Return and continued to consider the incorrect Tax Return that had already been amended, thus leading to the outcome letter detecting a huge variance and imposing a liability upon AMS Building Contractors.

“It is on those bases that the applicant humbly avers that it was not properly assessed for the year 2015 in that the amended CIT Return was not considered by SRA. 

The variance imposed or detected by SRA is not a true variance as it is improperly based on an unaudited Financial Statement and a CIT Return which was not reflective of the true financial position of the company owing to the company’s amendment of same,” he said.  Carlos said SRA would suffer no prejudice should it not enforce payment of the alleged tax liability which is neither due, owing and payable in terms of the provisions of the Tax Legislation and or in respect of which the company had successfully objected to. 

He said the company’s  was a well-established business and there was no likelihood of it being closed or liquidated at any given point. 

Appearing for the applicant is Kenneth Simelane of KN Simelane Attorneys in association with Henwood and Company.

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