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| IN THIS ISSUE: |
JULY 2008 - VOL 2 |
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OFFSHORE
- Mauritius 2008-2009 Finance Bill - South Africa Income Tax Amendments
INFRASTRUCTURE
- Client Banking Transactions: - New Treasurer: Enhancing Our Client
AVIATION NEWS
OTHER NEWS
LINKS
www.mauritiusrelocationservices.com
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South Africa Income Tax Amendments
A few amendments to the South African Income Tax Act have been enacted recently. The enactments relate to the Secondary Tax on Companies which is commonly referred to as STC, which is a tax payable on the declaration of dividends by a South African resident company. In addition to STC, there is also new treatment of Intellectual Property and Depreciation.
STC was reduced from 12.5% to10% with effect from 1 October 2007. However, certain items previously not taxed now fall into the STC tax net as part of South Africa’s ongoing anti-avoidance legislation.
South African STC is a tax levied on the Company when declaring dividends. However, in the future, this would convert into a dividend tax in the hands of the shareholder instead of the Company.
A recent amendment sees the introduction of a deemed capital haven and arises when a share, subject to various anti avoidance provisions, which has been held for a period in excess of 3 years is disposed. Any gains will be taxed at the lower capital gains tax rate of 10% for individuals as opposed to the much higher income tax rate of 40%. In respect of corporates, capital gains on disposal of shares are now taxed at 14% (income tax rate for corporates being 28%).
In respect of the development and disposal of Intellectual Property (IP), previously a South African entity could develop a product and transfer the IP to an offshore patent holder. The offshore entity could then charge the South African entity for the use of the IP. The usage fee paid to the offshore entity was a tax deductible expense in the books of the South African entity, however under new legislation payments made for the use of IP is no longer deductible if the property was previously owned or developed in South Africa. A deduction equal to one-third of the royalty fee is permissible where the royalty is subject to withholding tax of at least 10%. South Africa imposes a withholding tax of 12% on royalties although many of South Africa’s DTA’s provide for a zero percent rate.
A further amendment relates to depreciation. The amendment provides depreciation incentives for various assets that were previously ineligible. Depreciation incentive has been added to rolling stock, railway lines, port infrastructure assets, commercial buildings and environmental manufacturing assets.
Other enactments include a tax free work death benefits up to ZAR 300 000, sport funding, co-operative bank and the merger of stamp duty and un-certificated securities tax in to a single Securities Tax levied at 0.25% of the value of the transaction.
If you have any questions on the above, please address them to Kenneth Maillard at kmaillard@inter-oceanmgt.com
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| © All material displayed in this brochure, including, without limitation, articles, text, photographs, images and\or illustrations, (collectively, the Content) are protected under Mauritian and foreign copyright or other laws, and are owned by Inter-Ocean Management Limited, its licensors or the party accredited as the provider of the Content. Disclaimer: The information contained in this document is for general guidance and interest only and is not intended as authority or a substitute for specific advice in considering the legal effects of any particular structure or product. Anyone intending to base a decision on the information as contained in this document should therefore do so with professional advice. | ||||
