Adidas’s R1.9 billion tax case transfer request denied by Gauteng High Court

ADIDAS International and its South African licensee have failed in their attempt to move the SA Revenue Service’s (Sars’) bid to recover almost R1.9 billion in unpaid taxes from Gauteng to the Western Cape.

- LOYISO SIDIMBA

The German sports apparel giant, which is registered in Switzerland, and Cape Town-based Adidas South Africa, had asked the Gauteng High Court, Pretoria for the matter to be heard in the Western Cape division of the high court as it would be more convenient.

The legal battle emanates from Adidas’s challenge to Sars’ value determination in terms of the Customs and Excise Act.

Adidas South Africa is licensed to sell branded products in its licensed territory including South Africa, Botswana, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Swaziland, Zambia and Zimbabwe.

According to court papers, the value determination was the customs value of Adidas-branded goods, which were imported into the country between August 2007 and February 2013.

Sars determined that the customs value should include the price paid by Adidas South Africa to Adidas International rather than the price paid by Adidas International to foreign manufacturers and this resulted in a customs duty and VAT (value-added tax) assessment including penalties and interest of just over R1.87bn as of June 30, 2018.