South African Breweries’ (SAB) parent company, AB InBev, said its South African business might end up footing a R6.3 billion tax bill after the South African Revenue Service (SARS) conducted an audit of the sale of its stake in Coca-Cola Beverages Africa (CCBA).
SAB owned 57% of the new company, which began operating in 2016.
In October 2016, AB InBev announced it would merge with SAB. In the same month, Coke announced its intention to acquire SAB’s stake in CCBA.
Coke’s deal to acquire SAB’s stake was concluded in October 2017, the company now owns 66.5% of CCBA with the rest held by Gutsche Family Investments.
The sale of SAB’s stake to Coke is what SARS is currently investigating as part of its audit.
Preliminary findings from SARS show that SAB owes R6.3 billion in tax in addition to any penalties and interest incurred.
The value of the penalties and interest is unspecified but, according to AB InBev, it “may be significant” relative to R6.3 billion.
R6.3 billion is substantial, making up nearly 5% of AB InBev’s total revenue from its African operations in 2022.
SAB contests both claims and has responded to SARS concerning the preliminary findings.
The company intends to object to any assessment issued but “may be required to secure or pre-pay some or all of the taxes assessed, pending the outcome of SAB’s challenge and any appeal”.
AB InBev has made no related provision.