Share

More flexible domestic treasury management requirements

Cape Town - The 2017 draft Taxation Laws Amendment Bill and draft Tax Administration Laws Amendment Bill were released for comment in July 2017.

A domestic treasury management company must meet certain residence requirements in order to qualify for a relaxation of the normal rules relating to the taxation of foreign currency gains and losses.

The company in question must, in terms of the current definition, be incorporated in South Africa (or be deemed to be incorporated in SA) and have its place of effective management in SA, explains Sean Gilmour, a partner in the tax practice at Webber Wentzel.

The draft Taxation Laws Amendment Bill proposes that the requirement that a domestic treasury management company be incorporated in SA (or be deemed to be incorporated in SA) be removed as a requirement for the company to qualify for the regime.

If this change is enacted, a company will accordingly meet the residence requirement for a domestic treasury management company if its place of effective management is in South Africa (notwithstanding its place of incorporation).

According to Gilmour, this change is to be welcomed as it will provide more flexibility and should facilitate the use of existing foreign entities by SA based multinational groups for group treasury management purposes.

"It should be noted that if a taxpayer wishes to make use of an existing foreign incorporated company for this purpose, such a company will need to become SA tax resident. While a change in place of effective management is likely in practice, to be a far easier transition than a migration of legal residence, it could trigger tax consequences in the country where the company concerned is currently tax resident," he explains.

The change will be effective for years of assessment commencing on or after 1 January 2018.

SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.

Read Fin24's top stories trending on Twitter:

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.94
-0.0%
Rand - Pound
23.91
-0.0%
Rand - Euro
20.41
+0.1%
Rand - Aus dollar
12.33
+0.1%
Rand - Yen
0.13
-0.0%
Platinum
908.05
+1.2%
Palladium
1,014.94
+1.3%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders