According to the latest reports issued by Statistics South Africa and the World Bank, the services sector (financial services mainly) is the most significant contributor to the South African Economy.
Taxation of the sector has evolved through the years with the introduction of specific rules about structured financing with special anti-avoidance measures in place to specific hybrid instruments and the third-party backed shares, amongst other changes.
The tax implications of interest, debt raising costs and fair value gains/losses incurred on specific financial instruments require special attention due to the unique laws that are applicable. Our experienced tax team can assist with transaction advice on the tax implications of your finance structure, and we can review the tax efficiency of current financing instruments in place and propose an efficient solution.
If you are looking to expand into the African region using South Africa as a gateway/head office, we can advise on financing or capital structure that is tax-efficient for the whole group and is in line with the in-country laws.
Our services include:
- VAT apportionment matters that are generally associated with financial assistance.
- Advising on appropriate controls when foreign loans utilise finance assets currently under construction.
- Review of legal financing documents and report on the tax implications (compliance and financial reporting implications).
- Review of inter-company loan agreements and information on the tax implications for the group.
- Debt restructuring, preference shares vs ordinary shares vs debt, cross-border financing agreements.