South Africa: Bribes Are Not Tax Deductible - SARS Rejects Payments By Regiments Capital to Letterbox Companies

analysis

The SA Revenue Service has taken issue with alleged professional fee deduction claims of hundreds of millions of rands by Regiments Capital for payments it made to letterbox companies linked to the State Capture scandal.

Regiments Capital claimed more than R600-million in professional fees as taxable deductions -- a large chunk of payments it had made to several letterbox companies.

Those include the controversial Gupta-linked front company, Homix, that extracted just more than R139-million in 2015 and 2016 from Regiments.

This is according to a tax audit carried out by the South African Revenue Service (SARS) into the company's affairs for the period 2014 to 2016. Audits for 2017 to 2019 are still under way.

Regiments Capital was a highly successful financial advisory company until it was exposed in the State Capture scandal in 2016. It has since been the subject of multiple investigations including one by the National Prosecuting Authority for allegations of fraud, corruption and money laundering relating to its work at state-owned entities, including Transnet.

Ordinarily, an individual or company's tax matters are confidential, but SARS introduced documents into the public domain after an urgent high court bid by Regiments to wriggle...

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