SARS has won the latest round of its multibillion-rand tax battle against Chinese rail group CRRC E-Loco, a company directly implicated in state capture, reports News24.

A court ruling found the company – anonymised in the judgment – overstated its cost of sales by about R3bn, claimed deductions it had not incurred and channelled funds through related entities that SARS described as kickbacks.

The judgment is a clear win for the tax agency, which has been investigating CRRC E-Loco’s controversial contracts with Transnet since 2020.

While much of the Tax Court’s ruling is not new – with many of the details having already appeared in various commissions of inquiry, court cases and the #GuptaLeaks – it clears the way for SARS to recover CRRC E-Loco’s outstanding tax debt.

The judgment does not, however, say exactly what the company owes.

Previous High Court rulings, where names are not anonymised, provide an indication of the tax debt the company faces. 

Four years ago, the Gauteng High Court (Pretoria) found CRRC E-Loco had an assessed tax debt ‘in excess of R3.6bn’.

The following year, the same court referred to an outstanding tax debt of ‘some R4bn’. The company previously denied any involvement in or knowledge of corruption in the locomotive deals, even claiming that SARS’ investigation was part of a ‘well-orchestrated and unlawful campaign’ to get it to settle with Transnet.

CRRC E-Loco is the local unit of China’s state-owned rail giant CRRC, set up in 2012 to bid for a slice of Transnet’s ambitious programme to update its ageing locomotive fleet.

Between 2012 and 2014, it won three major contracts to supply hundreds of locomotives to the state-owned rail operator, deals were later linked to inflated pricing and billions of rands worth of alleged kickbacks.

Full News24 report