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Gold Leaf prepares to fight back after Sars freezes GLTC’s assets

GOLD LEAF TOBACCO Corporation (GLTC) has cried foul over the freezing of its assets by the court while the South African tax authority conducts a probe into the company’s tax affairs.

On Friday, the North Gauteng High Court in Pretoria granted the South African Revenue Service (Sars) a preservation order against the controversial cigarette manufacturer.

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The preservation order was granted in terms of section 163 of the Tax Administration Act No 28 of 2011 against GLTC and its directors, Simon Rudland and Ebrahim Adamjee.

The order prohibits the Zimbabwe- an-owned company and its directors from selling any of their assets while Sars continues with its investigation into tax avoidance.

However, a lawyer acting on behalf of Gold Leaf, Raees Saint of Saint Attorneys, told Business Report on Friday that the tobacco group was displeased with the order.

Saint said the preservation order was obtained exparte, without any notice to Gold Leaf based on “unsubstantiated and wholly untrue allegations”.

“Gold Leaf maintains its innocence and shall continue its operations with complete transparency with the Revenue Authority, as it has always done,” Saint said.

“Gold Leaf will continue to make its excise and VAT contributions, amounting to more than R2 billion per annum.”

Saint declined to delve into the merits of the litigation, but said that they will defend Sars’ application in court.

“However, Gold Leaf wishes to emphasise that it was appalling to note that Sars has opted to rely on falsely crafted information in support of their application against Gold Leaf, a taxpayer who makes an enormous contribution to the fiscus and South African economy,” he said.

“Our client will oppose the application and protect its rights under the judicial system and we firmly believe that the truth, fairness and justice will prevail.”

According to reports, Sars investigators told the court that they had evidence that Gold Leaf was involved in money laundering and may owe up to R3bn in undeclared income tax and VAT, and other taxes. Gold Leaf holds the distribution rights for cigarettes brands Voyager, RG, Chicago, Sahawi, Sharp and Savannah, which are sold both in the South African and export markets.

A report commissioned by British American Tobacco South Africa and con- ducted by market research firm Ipsos last year revealed that Gold Leaf’s products were among the cheapest on offer in the market, priced below the minimum taxable amount of R21.60 instead of the minimum price of R28 per pack of 20 cigarettes.

The Ipsos study found that the illicit tobacco sales were depriving the fiscus of more than R19bn a year. At the time, GLTC emphatically denied all and any allegations of illicit trading and instead said that it was making a significant steady contribution of R200 million per month to the South African economy through the payment of all its taxes.

Tax Justice South Africa on Friday said that the preservation order was a watershed moment in the battle against organised crime groups who are looting South Africa on an unprecedented scale. Tax Justice founder Yusuf Abramjee said this was a huge breakthrough in the battle against the illicit cigarette trade that robs South Africa of R19 billion a year.

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