EOH to pay R112m to settle tax dispute

EOH will pay the SA Revenue Service (Sars) R112m to settle a PAYE dispute involving its unit EOH Abantu, bringing closure to the group’s last significant legacy issue before former CEO Stephen van Coller’s departure.

The dispute dates back to 2012, during which time EOH took Sars to the high court. In terms of the agreement with Sars, the payment will be made by March 1 and is in line with Abantu’s year-end provisions and have no effect on the group income statement.

Abantu will forfeit its tax receivable credit of R6.9m, which wasn’t provided for and will negatively affect the income statement on the tax line. Abantu will also forfeit its assessed loss of R34.5m. “This has no income statement or balance sheet effect as no deferred tax provision was raised previously,” said EOH.

The group said that it had agreed with Standard Bank on a temporary increase in facilities to allow for payment to be made before the due date.

“We are extremely excited to close out our last significant legacy issue. While this negotiation was frustrating at times from an EOH business perspective, I would like to assure South Africans that in solving this very technical and complex issue, the senior Sars officials were extremely diligent in ensuring the best possible outcome for SA,” said Van Coller.

He said that the group could now focus firmly on executing its growth, efficiency and talent strategy.

“This large legacy issue was the final piece of the very complicated puzzle that was needed to be solved to allow the EOH Group to operate as a normal business.”

Andrew Mthembu, EOH’s chair, will take over the running of the technology company from the beginning of April when Van Coller retires from the CEO office at the end of March. EOH’s management has been busy with salvaging the company’s reputation after allegations of malpractice and tender irregularities under the previous leadership.

Management has also been dealing with a mountain of debt accumulated during the period when it focused on acquisitions to expand the business.