The commissioner of the South African Revenue Service (SARS), Edward Kieswetter, has welcomed the recent ruling by the Pretoria High Court against businessman Roux Shabangu.
The court held Shabangu liable for failing to settle outstanding taxes owed by himself and his associated entities.
“SARS will not waiver from its path to pursue all without fear, favour or prejudice. I hope this application will deter all who intend to follow this route,” said Kieswetter.
Shabangu, who has substantial interests in the construction and property sectors, had been embroiled in a legal dispute with SARS over unpaid taxes since 2019.
The lengthy legal process saw SARS take measures to prevent the dissipation of Shabangu’s realisable assets, which would have complicated efforts to recover the full amount of tax owed.
Preservation order
Kieswetter said SARS sought a preservation order under Section 163 of the Tax Administration Act (Act No. 28 of 2011) against Majestic Silver 275 (Pty) Ltd, Shabangu’s primary property holding company, as well as Shabangu and his family, who are members of The Roux Shabangu Family Trust.
He explained that in a bid to stave off the preservation order, Majestic Silver 275 (Pty) Ltd applied to enter voluntary business rescue proceedings.
SARS viewed the action as a stalling strategy because business rescue status would put a stop to legal actions against the company.
However, SARS opposed this effort, and in February 2023, it secured a provisional preservation order, which lifted the moratorium and appointed a curator bonis to oversee the assets of Majestic Silver 275 (Pty) Ltd, Shabangu, and his family members as trustees of the family trust.
By April 2024, SARS obtained a final preservation order, effectively nullifying the business rescue proceedings and placing control of Majestic Silver 275 (Pty) Ltd and its related entities under the court-appointed curator bonis.
The court’s decision sets the stage for further action, with SARS moving to apply for the liquidation of Shabangu’s companies and sequestration of his personal assets and those held by the family trust.
Final liquidation order
In September, these applications were presented before the Pretoria High Court.
Following deliberation, the court granted a final liquidation order against one of Shabangu’s companies while issuing three provisional orders against another company, Shabangu, and his family as trustees of the family trust.
“The results of the above applications serve as examples of SARS’ resolve to pierce through the corporate veil in its efforts to fulfil its legislative mandate to collect all money due to the country’s fiscus.
“Significantly, the sequestration order granted against the trust is of particular importance as it highlights SARS’ ongoing efforts to enforce tax compliance against discretionary trusts, which have been commonly used as vehicles to evade taxes,” said Kieswetter.
