EOH to pay SARS R112m over tax dispute

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 29 Feb 2024
Outgoing EOH CEO Stephen van Coller.
Outgoing EOH CEO Stephen van Coller.

Outgoing EOH CEO Stephen van Coller has resolved one of the legacy issues that dogged the company over the years.

The JSE-listed technology services firm today announced it has closed a long-running pay-as-you-earn (PAYE) dispute between its subsidiary Abantu and the South African Revenue Service (SARS).

The tax dispute, dating back to 2012, related to a PAYE dispute in two of EOH’s staff outsourcing businesses.

At 31 July 2023, EOH had provided for R115 million on the PAYE liability assessed, and was in ongoing discussions with SARS regarding the potential settlement of this matter, in line with the requirements of the Tax Administration Act, says the company in its financial statements.

In October 2022, EOH Abantu launched a review application against SARS relating to the tax dispute, it adds.

Since then, EOH Abantu and SARS have been engaging to resolve the dispute in an amicable and efficient manner through a compromise process.

In its statement today, EOH says: “Abantu and SARS have continuously engaged on this matter and have agreed to final settlement terms.”

The terms include EOH paying the taxman R112 million on or before 1 March 2024.

“This amount is in line with Abantu’s year-end provisions and, therefore, has no effect on the group income statement,” says the technology services firm.

The settlement also includes Abantu forfeiting its tax receivable credit of R6.9 million. According to EOH, this was not provided for and will negatively affect the income statement on the tax line.

Abantu will also have to forfeit its assessed loss of R34.5 million. “This has no income statement or balance sheet effect, as no deferred tax provision was raised previously,” the company adds.

Says Van Coller: “We are extremely excited to close out our last significant legacy issue. While this negotiation was frustrating at times from an EOH business perspective, I would like to assure South Africans that in solving this very technical and complex issue, the senior SARS officials were extremely diligent in ensuring the best possible outcome for South Africa.

“EOH can now focus firmly on executing our growth, efficiency and talent strategy. This large legacy issue was the final piece of the very complicated puzzle that was needed to be solved to allow the EOH Group to operate as a normal business.”

Van Coller will be leaving EOH in March, with Andrew Mthembu appointed as interim CEO as it searches for a new leader.

After years of fixing governance and corruption-related issues during his tenure, in October last year, Van Coller agreed to extend his initial five-year contract for another six months but asked the board not to consider an extension beyond 31 March 2024, at which time he will officially retire.

EOH expects to release its financial results for the six months ended 31 January 2024 on or about 26 March 2024.