Global | Publikation | Feb 22, 2017
Domestic treasury companies are generally not subject to tax in respect of foreign currency gains and losses. However, the qualifying criteria for domestic treasury management companies are viewed as overly restrictive and will be reviewed.
Relaxation of the rules regarding the payment of licence fees or royalties for so-called “tainted intellectual property” will be considered. It is proposed that the rules should be relaxed so that they do not affect legitimate commercial transactions or discourage the use of South African based group infrastructure to develop offshore intellectual property.
Amendments to the controlled foreign company rules are proposed which will extend the application of these rules to foreign companies held by interposed trusts which have South African beneficiaries. This rule could have a significant impact on a number of offshore structures.
Parties interested in new inward listings and transactions involving loop structures and trusts which relate to such listings will have to consult with National Treasury. The intention is to discourage inversion transactions in terms of which legal domicile may be moved to a different jurisdiction despite the entity retaining significant South African assets.
Government proposed removing restrictions on foreign exchange transactions involving intellectual property. It is also proposed that the restriction on loop structures be lifted in relation to transactions involving intellectual property, if they are entered into on an arm’s length basis and at fair market-related prices.
Government has proposed that local collective investment scheme management companies should be allowed to list exchange traded funds which hold foreign referenced assets on South African exchanges. These funds will not be subject to macro-prudential limits on the amounts that may be invested offshore. However, South African institutional investors and authorised dealers will have to treat investments in these funds as foreign assets which are subject to their portfolio allowances.
Publikation
n a long-running dispute, taking in no less than three arbitrations spanning 26 years cumulatively (involving allegations of state interference in the arbitral process), the Court has provided useful guidance on the ss.67 and 68 challenges, particularly in the context of investor-state claims.
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