Media Statement on recent SENS relating to the tax dispute between Coronation and SARS

Further to the cautionary SENS announcement issued on Wednesday, 8 February 2023, Coronation notes its disappointment in the decision of the Supreme Court of Appeal (SCA). The Group is committed to be a responsible corporate citizen, which includes timely payment of the appropriate taxes due in all the jurisdictions where we operate. The dispute between the Group and the South African Revenue Service (SARS) involves the interpretation and application of the South African tax laws in the context of the Group’s Irish business having adopted an outsourced business model. The SCA and Tax Court came to different conclusions. The Group believes that the SCA approach has significant implications for the global competitiveness of many South African businesses. When the matter was first raised by SARS in 2017, we immediately engaged with taxation experts and external legal counsel. SARS subsequently raised an assessment for the 2012 to 2017 financial periods which the Group took on appeal. Following due process, Coronation’s appeal to the Tax Court was heard during 2021. The Tax Court ruled in the Group’s favour on 17 September 2021 and accordingly set aside the SARS assessment.

SARS subsequently exercised its right to appeal the judgement of the Tax Court to the SCA. The appeal was heard on 17 November 2022 and the SCA handed down its judgement on Wednesday, 7 February 2023. Based upon its interpretation and application of the South African tax laws, it upheld SARS’ appeal and ordered Coronation to pay additional taxes in respect of profits earned by its Irish fund management company.

Following the ruling in favour of SARS by the SCA on Tuesday, Coronation is engaging with legal counsel and advisors. The Group has consistently maintained, based upon professional advice, that its tax treatment has been appropriate and is therefore considering an appeal against the judgement to the Constitutional Court.

We will keep all stakeholders apprised of developments going forward.

ENDS