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- In an urgent court request, the revenue service has prevented nearly $ 800 million linked to state capture from being returned to the CRRC group.
- Sars intervened when a freeze order first imposed on a portion of funds by the Reserve Bank was about to expire.
- CRRC paid bribes to companies related to Gupta which it allegedly recorded as tax deductible cost of sales.
Days before R1.26 billion in frozen funds were released to Gupta-linked Chinese railway group CRRC, the Gauteng High Court in Pretoria on Tuesday issued an order that the money remain frozen until the company provides a bank guarantee for the same. amount to the South African Tax Service (Sars).
An additional R1.5 billion will also remain frozen pending a bank guarantee, meaning a staggering R2.76 billion will be kept while Sars finalizes a tax claim against CRRC.
The tax collector was quick to go to court to prevent the release of funds that the Reserve Bank of South Africa froze three years ago “on the basis of irregular outflows and inflows from an exchange control perspective.”
Behind the Reserve Bank’s action at the time was the evidence first revealed by amaBhungane and our #GuptaLeaks partners that CRRC companies were paying a fifth of their revenue from Transnet locomotive contracts to shore fronts. outside of Gupta as bribes.
Subsequently, the Reserve Bank blocked additional amounts, currently amounting to R4.2 billion, but the initial tranche of R1.26 billion was to be released on Saturday, December 12 under the rule that funds must be thawed after 36 months.
Sars, which has been preparing a billions of rand tax bill against CRRC’s local affiliate, CRRC E-Loco Supply, based largely on evidence that the company had deducted commissions from its tax base, argued that “at the time the funds are released it will be externalized.”
Tuesday’s court order, the result of an agreement between Sars and CRRC E-Loco Supply, also ruled that an additional 1.5 billion rand will be retained in favor of Sars.
AmaBhungane understands that Sars requested that this amount be capped based on preliminary assessments of the company’s tax bill. Although the 36-month period to freeze the rest of the R4.2 billion frozen by the Reserve Bank will not expire anytime soon, the bank could decide to unfreeze the money before that date.
The legal challenge is a victory for Sars, although the combined amount of money kept under the order, R $ 766 billion, is less than the R3 billion or more that Sars said in its founding documents that it believed “for reasonable reasons.” , including penalties and interest.
In his documents, Sars had also asked the court to appoint a conservator to take over CRRC E-Loco. However, a conservator will not be appointed in terms of the final request.
The Reserve Bank’s reason for the initial freeze of the billions of CRRCs was that the company had violated the exchange control rules by claiming that it exported money only for the importation of locomotives, while in reality it was using the 21 % of funds to pay Gupta bribes abroad. .
In its attempt to ensure that the money stays in the country, Sars argued that CRRC did not change it when the company included bribes in its tax-deductible cost of sales.
Sars’s own research was based on amaBhungane’s extensive exposition in June of this year on the insane Guptas heist.