Not many companies can brag about playing a role in rearranging a country’s tax policy.Edcon can, though it probably doesn’t want to.For a few years after Bain Capital swooped on the country’s largest nonfood retailer, the SA Revenue Service (Sars) seemed unperturbed about the loss of one of its largest corporate contributors.This changed dramatically in 2011. It was as though Sars suddenly realised that Bain Capital’s tight grasp on Edcon’s profit flow wasn’t going to be released for some time, spelling disaster for Sars’s coffers.This is how it worked: in 2008, Edcon reported a trading profit of R1.9bn and a tax liability of R429m, but it was saved from actually having to hand over this money by a huge R2.5bn of net financing costs, which led to a net loss of R1.3bn. It was a similar story in 2009 (a net loss of R640m) and 2010 (a net loss of R1bn).By now Sars had realised that something had better be done. So in June 2011 it made a dramatic announcement: there was to be an 18-mon...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.