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UK corporate tax rate now too low for SA HoldCo’s liking
UK Corporation Tax Rate – reduced to 19% in 2017 and 18% in 2020
The main rate of Corporation Tax (UK) at a high 28% rate in 2010, was already reduced to its current 20%. In Budget 2015, in order to boost UK businesses, the compartive company tax rate will now reduce to 19% on 6 April 2016 (i.r.o. tax yea April 2017).
In terms of SA tax law, controlled foreign company (CFC) income is imputed as Hold Co’s income, duly taxed by SARS. For a SA Hold Co with a CFC subsidiary in a high tax jurisdiction, there is a so called high tax jurisdiction exemption.
Where a foreign subsidiary (the CFC) is taxed at 75% of the SA tax rate, the CFC income in not imputed into the SA tax system. At a current 28%, the high tax jurisdiction exempted CFC’s need to pay tax at a corporate rate of at least 21%.
In the SA tax year ending February 2016, the SA Hold Co regime need now top-up to SARS the tax rate discount enjoyed in the UK. Soon the SARS top up on UK entities will equal 10% – a figure far too high to be considered fair and reasonable.
Yes, there may be other reason for the CFC enjoying SARS tax exemption, yet one cannot but guess the number of SA Holding Companies are now reconsidering the investment into the UK.
For SA resident Holding Companies the last year’s 2% corporate tax rate saving, equates to an 8-9% effective tax rate increase.
Could we expect SARS to review the anomaly created because the UK’s corporate tax reduction of 10% in the last say 6 years.
Formal Emigration – Not advisable for all!
Formal Emigration – Not advisable for all!.
First publisched by: http://www.bcbadvisory.com/formal-emigration-not-advisable-for-all/
Formal or financial emigration is the process to formally change your exchange control status from resident to non-resident. It is also sometimes known as Excon Exit.
Financial emigration will not affect a South African’s right to retain their South African citizenship or dual citizenship. It is thus a purely financial process.
Following financial emigration from South Africa, a person can remain tax resident in SA, based on the time spent in the country and subject to the double taxation agreement (DTA) in which the person will be living in future.
Tax emigration or exiting the SA tax system is not subject to formal emigration.
It is a complex process and not advisable for all, but why would one consider the options? What will be the costs?
The process
Before a person can start the process of formal emigration his/her tax affairs must be in order and up to date, as a tax emigration clearance certificate from SARS is needed to get the ball rolling.
As soon as a tax clearance certificate is obtained from South African Revenue Service (SARS), an application is lodged through a South African Bank also known as an authorised dealer (AD) of the SA Reserve Bank (SARB). All assets need to be declared to SARB. The AD then applies at the South African Reserve Bank for an Exchange Control Approval Number (ECA) where after a blocked account is opened alternatively an existing account is converted into a blocked account. Each immigrant may have only one blocked account.
Once the emigration process has been completed, capital transfers have to flow offshore via this ‘blocked’ account.
Capital acquired and income earned post formal emigration need not flow through this blocked account. Typically inheritances received once you have been formally emigrated can be paid by the executor to you foreign bank account.
Should you only leave a pension or living annuity behind, there is no need for a blocked account as the fund can pay directly to your foreign bank account.
Funds allowed to be taken out of South Africa
The South African Reserve Bank allows emigrants the following facilities:
Foreign Capital Allowance (FCA) – R10 million per adult per calendar year or R20 million per family unit per calendar year.
In the year of actual departure, a travel allowance of up to R1 million per adult and R200 000 per child under the age of 18 years is allowed. The travel allowance may not be accorded more than 60 days prior to departure; and
Export of household and personal effects, motor vehicles, caravans, trailers, motorcycles, stamps, coins and minted gold bars (excluding coins that are legal tender in South Africa) within an overall insured value of R2 million.
Any remaining assets in South Africa will be blocked, but can be used for locally for any purpose and more recently SARB will allow listed and unlisted equities to be transferred out of SA as part of your annual R10m FCA.
What BCBA can do for you
Many service providers focus on formal emigration or retirement annuities only. They therefore encourage clients to formally emigrate. In fact, formal emigration services are sold as a free consultation.
The days, if it ever existed, of free lunches is long gone.
Not only can you personally manage the formal emigration process, you can often legally avoid the cumbersome process
For certain clients, formal emigration is often the only option available for the cost of a telephone conference (R969). We will be able to analyse your position and suggest the best solution.
Where clients so elect, we will complete the entire formal emigration process on their behalf. The process will be explained to you in detail and once again, we facilitate the free flow of funds. Your SA Rand will at all times remain under your own control.
BCBA will also be able to assist and advise you on how funds from the blocked account can be accessed.
For clients with “trapped” retirement annuities, preservation funds and so called living annuities, BCBA will provide the necessary guidance and where required, we will facilitate with or without formal emigration.
You formally emigrated and need advice or a second opinion? Call on us and we will assist and guide you in the right direction.
Clients having inherited funds or assets need not formally emigrate. There may be a cheaper and easier alternative.
For more information in your unique circumstances, please contact Hugo van Zyl athugo@bcbadvisory.com
Rykes waai in hul hordes: ‘Wurggreep van geldreëls’ dwing hulle uit SA
Rykes waai in hul hordes: ‘Wurggreep van geldreëls’ dwing hulle uit SA
Source: Rapport Deur Pieter-Louis Myburgh Sondag 05 Oktober 2014 3:07 nm.
Ryk Suid-Afrikaners emigreer in hul hordes omdat hulle vertroue in die land se ekonomie verloor het.
Voorts is Suid-Afrika se “argaïese” valutabeheerstelsel, wat veronderstel is om te verhinder dat te veel geld die land verlaat, ’n groot rede vir dié valuta-uittog.
Rapport het met drie finansiële praktisyns gepraat wat mense met hul geldsake help wanneer hulle emigreer of geld in die buiteland wil belê.
Al drie sê al hoe meer welvarende en hoogs opgeleide Suid-Afrikaners neem hul geld en vaardighede na die buiteland.
Dit kom nadat die Suid-Afrikaanse internet-miljardêr en ruimtereisiger Mark Shuttleworth die afgelope week ’n geskiedkundige sege teen die Suid-Afrikaanse Reserwebank in die appèlhof behaal het.
Die bank is beveel om die R250 miljoen wat Shuttleworth in 2001 onder protes moes betaal om sy fortuin van meer as R4 miljard na die buiteland te skuif, aan hom terug te betaal.
Shuttleworth het aangekondig hy gaan die geld in ’n trust belê om ander Suid-Afrikaners by te staan wat die regering oor grondwetlike kwessies in die howe wil pak.
“Miljarde der miljarde rande verlaat tans die land saam met welvarende Suid-Afrikaners wat emigreer,” sê Michael Honiball van die regsfirma Webber Wentzel se belastingafdeling.
Die presiese bedrae wat die land verlaat, is onbekend en die Reserwebank wou nie dié besonderhede aan Rapport beskikbaar stel nie.
“Kragtens art. 33 van die Suid-Afrikaanse Reserwebank-wet kan die Reserwebank nie hierdie inligting deel nie,” het Hlengani Mathebula, die bank se woordvoerder, in sy reaksie per e-pos geskryf.
Honiball sê dit is baie kommerwekkend om te sien in watter getalle welvarende Suid-Afrikaners die land verlaat.
“Dit is mense wat werk hier skep, ons het hulle nodig. Maar die wurggreep van (ekonomiese) regulasies waarmee ons hier moet worstel, dwing hulle om oorsee te gaan sake doen,” sê Honiball.
Hy kry veral te doen met plaaslike entrepreneurs wat hul maatskappye soms vir honderde miljoene rande verkoop en dan met hul fortuin na die buiteland trek.
Ryno Viljoen, stigter van die maatskappy Cashkows, sê hy kry nou tot 150 aansoeke elke maand van mense wat die land wil verlaat.
“Dit is skrikwekkend,” sê Viljoen. Hy hanteer kliënte wie se bates enigiets tussen R20 000 en R200 miljoen beloop.
Volgens Viljoen voel welvarende Suid-Afrikaners genoop om die land te verlaat omdat daar onsekerheid is oor kwessies soos eiendom- en grondregte.
“Dit het vir hulle meer sin om hul kapitaal na die buiteland te skuif,” sê Viljoen.
Hy is skepties oor die uitwerking van veldtogte wat Suid-Afrikaners in die buiteland aanmoedig om terug te kom.
“Uit my eie ervaring kan ek sê daar is baie min mense wat terugkom,” sê Viljoen.
Hugo van Zyl, ’n belastingpraktisyn wat in internasionale transaksies spesialiseer, sê net die pensioene van sy kliënte wat reeds oorsee is, beloop elke maand R9 miljoen.
Hy sê die Reserwebank se streng reëls oor intellektuele eiendom, waarvolgens Suid-Afrikaners nie patente in die buiteland kan registreer nie, dryf baie innoverende individue landuit.
“Hulle gaan doen hul navorsing oorsee in plekke soos Silicon Valley (in die VSA),” sê Van Zyl.
Honiball sê Suid-Afrika skiet homself in die voet met sy argaïese valutabeheerstelsel.
“Dink logies daaroor. Watter land ter wêreld laat jou nie toe om jou eie geld landuit te neem soos jy dit goeddink nie?
“Alle lande het in ’n mindere of meerdere mate valutabeheer, maar Suid-Afrika is die laaste land ter wêreld wat só streng is,” meen Honiball.
Stellenbosch / USA / UK / Australia – Contact Details
- USA +1-818-924 5001
- Australia +61(0) 3 9013 5001
- For the other countries download the business card
FATCA in Afrikaans? BRS:AEOI? Is this Marmite on Toast you ask?
“BRS: AEOI” means Business Requirement Specification: Automatic Exchange of Information
There is so many new tax acronyms, one can’t be blamed for not always knowing the full phrase behind the tax acronym.
To guide you, we add a few new once, all from an SA perspective yet they are all well-known international acronyms or abbreviations.
Here they are, but it is not an exhaustive list:
- AEOI – Automatic Exchange of Information aka AEFAI as per SARS press release on BRS
- AEFAI – Automatic Exchange of Financial Account Information
- ATO – Australian Tax Office www.ato.gov.au
- BRS – Business Requirement Specification or Direct Data Flow Channel Guide aka SARS Modernised 3rd Party Reporting platform, used to report inter alia PAYE, VAT, Investment Income (IT3’s).
- CRA – Canadian Revenue Authority – http://www.cra-arc.gc.ca/menu-eng.html
- eFile – the South African online tax filing portal www.sarsefiling.co.za
- Excon – Exchange Control aka FinSurv- SA monetary laws administered by SARB
- FATCA – Foreign Account Tax Compliance Act – FFI and other tax offices dotted over the word reports on you to the IRS. An USA Act see http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-FATCA
- FBAR – Report on Foreign Bank Account reporting – you tell IRS
- FFI – foreign (non-USA) financial institutions – FATCA terminology compare with USFI or FI that is USA based
- FinSurv – Financial Surveillance, previously known as Control or SARB’s Exchange Control watchdog
- HMRC – Her Majesty’s Revenue & Customs – UK tax office http://www.hmrc.gov.uk/
- IGA – Model 1 and Model 2 intergovernmental agreements (IGA) or FATCA agreement between IRS and SA on the AEOI process using the BRS designed and implemented in the various IGA jurisdictions
- IRD – Inland Revenue – New Zealand aka Maori as Te Tari Taake
- IRS – Inland Revenue Services in the USA www.irs.gov
- MTP (SA) – Master Tax Practitioner in SA – the Who’s Who in SA tax environment
- PR – Tax practitioner registered with SARS
- SARB – South African Reserve Bank, equivalent to the Central Bank in international terms www.resbank.co.za
- SARS – South African Revenue Service – www.sars.gov.za
- TAA – Tax Administration Act – South African Act dealing with C:SARS rights to administer tax acts
- USFI – U.S. financial institutions the internal US hold Co aka as lead FI reporting for all FFI’s in the FI Group
OK, you still lost? Need some more info on all the buzz words and your compliance risk and obligation? Feel free to ask the questions:
Breaking news …..
Hugo van Zyl Contact Detail
Breaking news….
- New office numbers as of July 2014, for now use mobile number or the following SKYPE numbers
- USA – + 1 818 924 5001
- UK – + 44 20 3239 7756
- South Africa – 021 813 9775 / 012 743 6564 or mobile above
- ATO Amnesty for offshore trusts – that is your SA Trust’s come out of jail card
- Just Do IT – The ATs’ Australian Campaign re offshore assets not fully disclosed
- Retired and living outside South Africa – think twice before your emigrate as your SA pension is now freely transferable i.e. neither a tax clearance nor a formal emigration is required. Pensioners Freedom
