A complex multi-billion rand tax avoidance scheme, with family patriarch Atul Gupta at its centre.
The Guptas appear to have used both personal and inter-company loans to and from their group companies, many of which are offshore, in their arsenal. The practice involve shifting finances and expenses from one company to another prior to the end of a business’s financial year end.
Tax experts said the picture painted in the transactions captured in the e-mail leak points to evidence of a complex practice known as staggering or revolving loans.
The loans are then reflected as assets and not as income, which is taxable. The loans enable one to reflect a particular financial status at year-end and move money offshore where entities hold accounts.
The Guptas failed to respond to questions on the allegations this week, while SARS failed to answer questions in detail.
An e-mail sent from Gupta lieutenant, Ashu Chawla, to Atul Gupta, dated December 18 2012, contains a spreadsheet with detailed information on loans to and from the family’s Sahara Computers totalling over R1.6-billion.
Of this, Atul, who is a South African tax and exchange control resident and was a director of Sahara Computers, received personal loans from the company, totalling over R144-million.
The company’s financial records show that he had only paid back R13-million.
Company loans to shareholders are partially taxable when interest-free. Cash flow analysis of Sahara Computer business accounts gives further insight into their finances and the alleged staggered loans.
The data show how between December 2012 and September 2015 Atul continued to owe the company roughly R140-million, without allegedly paying back any of the money.
Based on these figures, without incurring any penalties for the non-payment, Sahara Computers or Atul would owe SARS millions of rands in taxes for this loan. With penalties and interest for non-payment, his bill would be substantially higher on this loan alone.
Sowetan sister publication, The Times, is in possession of 356 days of bank statements which account for nearly 40% of the company’s transactions for that period.
The statements show that Sahara had turnover of R1.8-billion for this period.
Werksmans Attorneys tax lawyer Ryan Killoran said Atul could only have received his loan tax-free if Sahara Computers had paid dividends taxes on the loan.
SARS spokesman Sandile Memela refused to answer questions on the Guptas’ tax affairs.