Sterling & Wilson Renewable Energy , a prominent player in the renewable energy sector, has received a significant reduction in its tax liability from the South African Revenue Service (SARS). The company's tax demand in South Africa has been substantially decreased from 40.24 crore rupees to 9.59 crore rupees, marking a 76% reduction.

Tax Demand Revision

According to a regulatory filing by Sterling & Wilson on September 19, SARS has issued a withdrawal notice for a part of the earlier tax demand. The initial tax demand stood at 80.47 million South African Rand (approximately 40.24 crore rupees). Following the revision, the new tax demand has been set at about 18.90 million South African Rand, equivalent to approximately 9.59 crore rupees.

Financial Impact

This substantial reduction in tax liability represents a positive development for Sterling & Wilson Renewable Energy. The revised figure signifies a decrease of about 30.65 crore rupees from the original demand, which could potentially have a favorable impact on the company's financial position.

Regulatory Compliance

The company made this disclosure in compliance with Regulation 30 read with Para B of Part A of Schedule III of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. This update follows an earlier disclosure made by the company on September 3 regarding the same matter.

Company Background

Sterling & Wilson Renewable Energy, headquartered in Mumbai, operates in the renewable energy sector, focusing on solar energy solutions.

This development underscores the importance of tax-related matters in international operations and their potential impact on a company's financial outlook. Shareholders and investors of Sterling & Wilson Renewable Energy are likely to view this significant reduction in tax liability as a positive development for the company's operations in South Africa.

Sterling & Wilson Renewable Energy Limited (SWRE), a prominent player in the renewable energy sector, has announced that it has received a substantial tax demand from the Kenya Revenue Authority (KRA). The company disclosed this information in compliance with regulatory requirements, shedding light on the financial implications and its planned course of action.

Tax Assessment Details

The KRA has issued assessment orders to SWRE for the period spanning from January 1, 2020, to December 31, 2023. These orders indicate a shortfall in tax payments, including applicable interest and penalties, amounting to approximately Rs. 50.41 crore.

Reasons for the Tax Demand

According to the disclosure made by SWRE, the KRA's assessment is based on several factors:

1. Disregard of income-tax returns and transfer pricing study submitted by the company
2. Higher attribution of profits to SWRE's Kenya Branch
3. Consideration of transfer pricing adjustments leading to withholding tax obligations in Kenya
4. VAT demand related to ineligible credits
5. PAYE (Pay As You Earn) demand concerning accommodation provided to employees

Company's Response

SWRE has stated its intention to contest the tax demand. The company plans to file appeal(s) against the orders with the appropriate authorities within the prescribed time limit. This move indicates that SWRE disagrees with the KRA's assessment and is prepared to challenge it through legal channels.

Regulatory Compliance

The company made this disclosure in adherence to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. SWRE's Company Secretary and Compliance Officer, Jagannadha Rao Ch. V., has certified that the information provided is true, correct, and complete to the best of their knowledge and belief.

Implications and Outlook

While the tax demand of Rs. 50.41 crore is significant, the impact on SWRE's financial position and operations remains to be seen. The outcome of the appeal process will be crucial in determining the final financial implications for the company.

Investors and stakeholders of Sterling and Wilson Renewable Energy will likely be watching closely as this tax matter unfolds, particularly its potential impact on the company's operations in Kenya and its overall financial health.