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SA Issues Guidance On HQ Company Tax Relief

by Lorys Charalambous, Tax-News.com, Cyprus

15 April 2015


The South African Revenue Service (SARS) has issued a draft interpretation note on the part of South Africa's tax code dealing with headquarter companies, and particularly on the special tax relief provisions they have been granted.

The draft does not discuss all of the sections that are applicable to headquarter companies. However, it does point out that, with the South African Government wishing to promote the country as a gateway for investments into Africa, certain provisions of the tax code have been altered in their favor in order to create a more conducive environment.

The note points out that a headquarter company is subject to tax in the same way as any other resident company, but is also entitled to certain reliefs from income tax, capital gains tax, and dividends tax, which are not available to resident companies that are not headquarter companies. As a consequence of that special relief, headquarter companies are subject to special anti-avoidance rules.

In addition to the headquarter companies themselves, a foreign person receiving interest or royalties income from a headquarter company will, under specified circumstances, also be exempt from withholding tax.

Comments on the draft interpretation note should be forwarded to SARS by May 31, 2015.

TAGS: capital gains tax (CGT) | South Africa | tax | business | royalties | corporation tax | multinationals | transfer pricing | withholding tax | dividends | Africa

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