Bowmans is proud to have acted for the Coronation group in a nine-year dispute with SARS regarding whether the income of Coronation’s Irish subsidiary should be taxed in South Africa.

In a unanimous judgment handed down this morning (21 June 2024), the Constitutional Court ruled that Coronation’s interpretation of the tax rules governing controlled foreign companies was correct, that its Irish subsidiary qualified as a foreign business establishment and that its income should not have been subject to South African income tax. The Constitutional Court ruled that the Tax Court (which had ruled in Coronation’s favour) was correct and ordered SARS to issue reduced assessments excluding the foreign income and to pay Coronation’s costs.

The case has generated widespread interest, particularly in the financial services sector and has been closely followed. Partner James McKinnell says, ‘The judgment and the interpretation of the tax rules have a material impact, not only for Coronation, but for the large number of South African taxpayers that have controlled foreign subsidiary companies and that rely on the foreign business establishment exclusion.’

Congratulations to the Bowmans team who worked on this matter including James McKinnell, Wally Horak, Julia Choate, Palesa Shabangu and Doné Botha.