BMW loses appeal against Sars findings over employees' tax obligations | Cape Times

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German automobile giant BMW has lost in the Supreme Court of Appeal against findings relating to individual tax obligations of its employees. CapeTimesSA

Cape Town – German automobile giant BMW has lost in the Supreme Court of Appeal against findings relating to individual tax obligations of its employees. The question at the centre of the appeal was whether payments totalling R6.8 million made by BMW SA to tax consulting firms KPMG, Price Waterhouse Coopers and Raffray Tax Consultants CC for services to expatriate employees in respect of their domestic tax obligations, constituted a taxable benefit and formed part of gross income.

Additional costs are incurred by the expatriate employees, as a result of the group requiring them to work in foreign countries. The employment relationship between the expatriate employees and the group operates on an agreed "tax equalisation" basis, the SCA judgment read. According to the judgment, the SA Revenue Service had in 2009 queried why payments to the firms did not constitute a taxable fringe benefit, in respect of which each expatriate employee would be liable. In Sars’ view the payments to the tax consultants by BMW SA constituted such a benefit.Sars, unmoved, issued an assessment for the tax years 2004-2009. BMW SA objected to the assessment and Sars disallowed the objection.

 

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