- Denies owing M1, 4 Billion in taxes
- Says it is consulting its lawyers over the “slander” by Minister Phori
Bereng Mpaki/Mohalenyane Phakela
SOUTH African wool and mohair brokers, BKB, is mulling legal action against the government over what it considers to be “unfounded” allegations that it owes the government M1.4 billion in unpaid taxes.
BKB denied owing any taxes, saying it has twice written to the Lesotho Revenue Authority (LRA) for clarity over the issue but is not received responses in both instances.
The wool and mohair brokers further challenged the government to prove its allegations about the unpaid taxes.
This follows recent statements by the Minister of Small Business, Cooperatives and Marketing, Chalane Phori, who said that BKB had accumulated tax arrears to the tune of M1, 4 billion.
Mr Phori said this during a recent address to wool and mohair farmers in the Thaba Tseka district. The Thaba Tseka meeting is part of countrywide tours that Mr Phori is currently seized with along with his ministerial colleagues, Tefo Mapesela (Trade and Industry), Mahala Molapo (Agriculture and Food Security), Tlohelang Aumane (Development Planning) and Machesetsa Mofomobe (Deputy Minister of Home Affairs).
The ministers are on a mission to explain to farmers, the rationale behind the new Agricultural Marketing (Wool and Mohair Licensing) Regulations of 2018 which were recently tabled before parliament.
Among other things, the new regulations state that no one will be allowed to trade in wool and mohair without a licence from the Ministry of Small Business, Cooperatives and Marketing.
The regulations further state that “the holder of an export licence shall not export wool and mohair unless it is prepared, brokered, traded and auctioned in Lesotho”.
BKB, which has been selling wool and mohair on behalf of local farmers for the past 44 years recently registered in Lesotho to ensure compliance with the new regulations which have been described as draconian by the opposition.
Despite the company’s recent moves to comply with the new regulations, Mr Phori said the company remained on the wrong side of the country’s laws as it had been withholding taxes from the government which had since ballooned to M1, 4 billion.
Mr Phori said the BKB had not been paying tax despite deducting money from the farmers’ earnings over the years.
He further said the situation was made worse by the fact the company deducted value added tax (VAT) from the farmers’ earnings which was illegal as wool and mohair should not attract VAT.
VAT was introduced in July 2003 as an indirect tax levied on goods and services supplied in and outside Lesotho. It is only applicable to products and transactions where there has been value addition.
“BKB has not been paying tax for more than 40 years since it started operating in the country,” Mr Phori told the farmers.
“When you check on your pay slips you will see that tax has been deducted but BKB has never paid a cent to the government.
“It is also a criminal offence to deduct tax because wool and mohair is not supposed to be taxed. And the worst part is that when BKB has taxed you, it does not remit the tax to the government.”
He however, said despite the illegality of BKB’s actions and the huge amount it owed, the government would not take precipitous action and it was willing to negotiate with BKB to resolve the issue.
But BKB recently shot back and counter-accused the government of making unfounded allegations and demanded proof of the government’s claims that it owed taxes.
“BKB categorically denies the allegations and challenges government to prove its unfortunate allegations,” said BKB’s General Manager of Corporate Marketing and Public Relations, Jacobus A le Roux.
“The company is in consultation with its lawyers on what it deems as slander relating to an allegation that it owes the government taxes accumulated over 40 years of its business with Basotho farmers. We place on record that those are untruths levelled against our brand.
“We wish to reiterate that BKB trades as a South African Broker in Port Elizabeth for the growers and traders of Lesotho and other Southern African countries. BKB was assessed by the tax authorities in Lesotho and sought advice from our auditors and sent letters to the LRA through our Lesotho attorneys but to date a response is awaiting though a follow-up letter was written and served on the LRA on 14 May 2018.”
BKB further said it was considering whether or not to de-register a company that it registered in Lesotho on 3 April this year. Among other things, the company would address issues of animal disease control through the wholesale and retail sale of medicine and vaccinations.
“The company was registered on the 3 April 2018 and the business extract is available for public scrutiny. The company was never registered on the invitation of government but by a shareholder view of BKB, the public company in South Africa.
“We have since stopped any processes on the activation of that company which is currently dormant. BKB is further consulting with its board about the Lesotho entity on whether to proceed with activation or de-registration.”
BKB however, said they remained committed to doing with local farmers who have trusted them “as a broker of choice for the auction of wool and mohair”.
“BKB has consistently been producer-centric in its approach. It is this producer-centric approach that has made BKB a partner of choice for Basotho growers and traders at the point and port of auction at Port Elizabeth. The trust and integrity we espouse has seen the Lesotho Wool and Mohair Growers Association (LNWMGA) and members of Farmers Rock association (an Association of Traders) choosing BKB as their broker.
“We would like to inform Basotho that BKB is not the only broker in the region and growers and traders have a choice to trade with whoever they wish as we all know that all persons in business transact in a free market enterprise and at free will with whomever they so choose.
“We wish to extend our continued commitment to the growers and traders in Lesotho to ensure Lesotho wool and mohair remains competitive at the auction house. We wish to inform the Basotho nation that the partnership between BKB and its farming community extends to shearer seasonal workers who are contracted in South African farms through BKB- over 300 Basotho labourers get employment because of BKB,” Mr le Roux said.