By Matthew le Cordeur
Cape Town – Kumba Iron Ore was the biggest loser on the JSE on Friday after it announced it would pay the South African Revenue Service (Sars) a R2.5bn tax bill.
The payment will settle a dispute relating to assessments received for the years 2006 to 2010 inclusive, and the tax treatment of the relevant issues in the years 2011 to 2015 inclusive, the mining company said in a statement on Friday.
Kumba’s share price dived by 6.56% at 10:30 on Friday (share price R199), topping the loser list that was filled with South Africa’s mining companies like Impala (down 4.74%), Anglo American (which owns Kumba and down 3.96%), Assore (down 3.75%) and Glencore (down 3.52%).
In February 2016, Kumba was slapped with a R5.5bn tax claim, including R3.7bn in interest and penalties, following an audit of the tax years 2006 to 2010 of Sishen Iron Ore Company, in which Kumba has a 76.3% stake.
In September 2016, Sishen received another R1bn tax bill for the 2011 tax year.
At the time, the company said it would dispute the tax bill, saying it “disagrees with Sars’ audit findings and will respond to the letter accordingly and within the prescribed period”.
“Kumba had already provided for an amount of R1.5bn in its annual financial statements for the tax years up to 2015, and an additional R1bn will be accounted for in 2016 in respect of this settlement agreement,” it said on Friday.
“The settlement will be paid in full in (the first quarter of 2017), with appropriate adjustments made for current advance payments held on account.”
As a responsible corporate citizen, Kumba said its policy is to be tax compliant in all jurisdictions in which it operates.
“I am pleased that we have reached this important settlement with Sars, providing clarity for all and enabling us to focus our efforts on ensuring that Kumba continues to operate at the optimal level and furthers its position as a major economic and social contributor to the South African economy,” said Kumba CEO Themba Mkhwanazi.
“Kumba generates substantial value for all its stakeholders and is fully committed to the transformation of the South African mining industry and to the wider societal and economic benefits that we bring,” he said in September.
Kumba said its output fell 8% in 2016 amid plans for Anglo to sell the company. – Fin24
Source: http://www.fin24.com/Companies/Mining/kumba-to-pay-r25bn-tax-bill-shares-dive-most-on-jse-20170203
Kumba Iron Ore media release
Kumba announces its agreement with the South African Revenue Service (“SARS”) to settle a dispute relating to assessments received for the years 2006 to 2010 inclusive, and the tax treatment of the relevant issues in the years 2011 to 2015 inclusive, for a full and final total settlement amount of R2.5 billion (approximately $185 million). Shareholders are referred to the announcements released on the Stock Exchange News Service of the JSE Limited on 29 February 2016 and 13 September 2016 regarding the tax discussions between Sishen Iron Ore Company (“SIOC”), a 76.3% subsidiary of Kumba, and SARS.
Kumba had already provided for an amount of R1.5 billion in its annual financial statements for the tax years up to 2015, and an additional R1.0 billion will be accounted for in 2016 in respect of this settlement agreement. The settlement will be paid in full in Q1 2017, with appropriate adjustments made for current advance payments held on account.
As a responsible corporate citizen, our policy is to be tax compliant in all jurisdictions in which we operate.
Themba Mkhwanazi, CEO of Kumba, said: “I am pleased that we have reached this important settlement with SARS, providing clarity for all and enabling us to focus our efforts on ensuring that Kumba continues to operate at the optimal level and furthers its position as a major economic and social contributor to the South African economy.”
Kumba generates substantial value for all its stakeholders and is fully committed to the transformation of the South African mining industry and to the wider societal and economic benefits that the Company brings; for example in 2015 alone, a year during which the iron ore price fell sharply, Kumba contributed R900 million in corporate taxes and mineral royalties, R4.7 billion in salaries and wages, R15.2 billion in local procurement, R6.8 billion of capital reinvested in the business and R174 million in social investment in health, housing, education and small business development.
