Capitec wins tax fight against SARS in landmark Constitutional Court ruling

Bruce Whitfield speaks to Charles De Wet, tax executive at ENSAfrica. 

Capitec has won a 7-year long battle with SARS over a R71m tax dispute.

The matter which dates back to 2017, revolves around a VAT claim by Capitec.

The bank provide insurance cover on its unsecured loans to its clients without charging a premium.

The VAT act allows for an insurance company to claim the input tax on payouts on that amount, which Capitec did.

SARS rejected Capitec's claim, resulting in the bank heading to the Constitutional Court. 

Charles De Wet, tax executive at ENSAfrica explains that Capitec does not charge VAT on interest or on the loan because it's a financial service.

However, it does charge VAT on its fees.

"...a loan that a bank advances, there would be no VAT on the loan itself because that is a financial service. There would be no VAT on the interest that is charged on that loan, also because that is a financial service. But there would be VAT on the fees that are levied by the bank..."

- Charles De Wet, tax executive - ENSAfrica

"This R71.5m related to one financial year. If you go back to 2023/14...times 10, that's R710m, that would be at stake in this circumstance, so that's what made this fight worthwhile."

- Charles De Wet, tax executive - ENSAfrica

"I think this has clarified very important principles from a VAT perspective..."

- Charles De Wet, tax executive - ENSAfrica

Scroll to the top to listen to the audio for the full interview.