Wealth in any form is now under threat more than ever before. Your Rand value has lost at least 80% of its value in the last 25 years, while the currency trend against major international currencies is a continuing downward one. The country has been reduced to under junk status by international grading institutions, while we face a negative growth for some time to come after the Corona virus pandemic.
While we all face the current pandemic, one must not play into the hands of the mainstream media, by falling into the trap of distraction – and forget about other important matters on the agenda, such as expropriation of land (and other assets) without compensation.
Wealth distribution has always been an ideology of the ruling party and is a given that radical steps will be implemented to achieve these goals.
One solution is to restructure your current structures to include an off-shore structure, where funds could be accumulated for investment in stronger currencies such as the Dollar, Pound or Euro, acting as a hedge against the devaluing Rand. This could allow you to make investments into other assets elsewhere, such as tax haven islands, even in land. In addition, such structure will afford you stronger protection against expropriation of land and other assets, as the off-shore entity will be regarded as a ‘’foreign investor’’ if structured correctly. With a long-term lease between your property holding company and trading company, and the off-shore entity owning most of the equity in the property holding company, you can claim continuing possession and operation of your business, like farming, on the land, while the foreign entity could claim a reward at international arbitration forums for expropriation without compensation.
Although South Africa has one of the most complex and strict tax laws and exchange control regulations, jealously protecting capital flowing out the country, there are solutions to design the proposed restructuring in such a way so as to avoid all taxes, such as capital gains tax, transfer duty and VAT if property need to be moved, while giving you the opportunity to save further taxes in the correct structuring of your business. The latter also includes estate duty, which many business people tend to forget in their future planning, and thereby forgoing a large portion of their wealth to the state in the form of taxes (estate duty and CGT), instead of it being left as a legacy to their family members.
Don’t postpone, or leave it for another day...act now and get your business and company affairs in order. Entrepreneurs need to think about change, about resilience, about helping others, adjusting to a new economic world and their legacy.