HQ tax benefits for JSE companies

It said the proposals were intended to support South African companies that wanted to expand into the rest of Africa and incentivise them to manage their African and offshore operations from this country.

In terms of the new rules - posted on the National Treasury's website as an annexure to the Budget Review - JSE-listed companies will in future be able to establish one wholly-owned subsidiary which is incorporated in and tax-resident in SA as the holding company for all their African and offshore operations.

These special companies will be unrestricted by foreign exchange regulations and will also qualify for special tax treatment.

They would be allowed to freely raise and deploy capital offshore provided these funds were without South African guarantees.

Also‚ they would be allowed to operate as cash management centres for South African multinationals and be allowed to pool their cash on an unrestricted basis.

They would be able to choose their functional currencies and operate foreign currency accounts and a rand-denominated account for operational expenses.

Treasury deputy director general Ismail Momoniat explained that the effect of these measures would be that listed companies would be able to participate in the headquarter tax regime formerly reserved for international companies. He said the dispensation might be extended to other entities following a pilot project.

The new type of company would have to be registered with the financial surveillance department of the Reserve Bank.

Transfers from the parent company to the special subsidiary would be allowed up to R750m a year.