Pepkor’s chief executive, Pieter Erasmus, is set to confront the South African Revenue Service in court next week over claims exceeding R300 million linked to his personal financial affairs. According to documents filed with the Supreme Court of Appeal. The tax authority maintains that Erasmus participated in an unlawful tax avoidance strategy under the Income Tax Act, a contention he has vigorously contested since his return to the helm of the retail giant in 2023 after a five-year hiatus.
The dispute centres on Treemo, an entity where Erasmus and his family trust held shares, which disbursed R1.4 billion in capital and cash distributions to him in 2015. Sars contends these cash outflows qualify as dividends, rendering them liable for dividends tax. Consequently, it issued an assessment for R183.5 million in tax, supplemented by a R137.6 million penalty for understatement, plus accrued interest.
Sars points out that no dividends tax was initially imposed or settled because Treemo utilised over R1 billion in secondary tax on companies credits to offset the distributions’ value. Four years post-transaction, the agency sought clarification and records from Erasmus regarding dealings between Treemo, the trust, and himself spanning 2015 to 2018.
In his April 2019 response, Erasmus outlined disposing of 5.5 million Pepkor shares—valued at R510 million—in December 2014, alongside selling his stake in Klee for R310 million. These were exchanged for Treemo shares, as was a R750 million batch of redeemable preference shares in Newshelf. He attributed the non-disclosure of Treemo payments to an inadvertent error by his accountants, asserting no tax liability arose due to the offsetting credits and the capital distribution’s status as a tax-exempt return of capital.
Sars dismissed this rationale, alleging that Erasmus, the trust, and associates orchestrated an impermissible avoidance mechanism through interconnected 2014-2015 transactions to harness the credits and evade dividends tax. As detailed in Sars’s appeal submissions. Erasmus refutes any deliberate evasion, explaining to the agency that his 2013 decision to amalgamate assets into one holding company led to acquiring Treemo in 2014 for asset swaps.
This occurred against the backdrop of Steinhoff’s acquisition of ninety-two per cent of Pepkor later that year, leaving eight per cent with management, including Erasmus. Pepkor, encompassing brands like Pep and Ackermans, has since navigated retail turbulence, posting R80 billion in revenue for 2025 amid consumer strains, according to the company’s annual results. Erasmus’s leadership has emphasised cost efficiencies and digital expansion, bolstering its position in South Africa’s R1 trillion retail sector.
The tax court previously sided with Erasmus, a verdict Sars now seeks to overturn at the Supreme Court of Appeal. This case echoes broader Sars crackdowns on high-net-worth individuals, with avoidance probes recovering R20 billion in 2024 alone, as reported by Business Day. Amid economic pressures like nine per cent inflation and sluggish growth, such disputes underscore tensions between fiscal enforcement and business agility, potentially setting precedents for trust-based wealth structuring.