Our firm is proud to be presenting our specialised services in respect of land and Asset protection - the externalisation of ownership to offshore structures - at the Son Safari Agri Show in Mauritius from 1 – 5 May 2022.
The current problems (not conclusive) facing South Africa and every farmer, entrepreneur and asset owner:
1.1 Key socioeconomic challenges - high rates of poverty, social inequality, unemployment, and public service access disparities. Under the highest unemployment rates in the world.
1.2 Land reform and expropriation without compensation.
1.3 Violent crime, periodic anti-immigrant violence, labour unrest, protests over public service delivery and corruption.
1.4 Looting and rioting of businesses and facilities.
1.5 Narrow tax base – small portion of population pays 90% of all taxes.
1.6 The Rand has lost about 77% of its value in the last 27 years.
2. Why restructure and hold ownership in assets via an offshore structure?
2.1 Protect the value of your Rands by channelling profits and capital offshore and invest in stronger currencies.
2.2 Ensure a presence in a stable offshore country from where global investments could be made and managed, including property.
2.3 A safe haven from where a new life could be started when local political instability and socio-economic conditions get unbearable.
2.4 Earning profits and income in an offshore jurisdiction where there are no taxes or very low taxes.
2.5 Ensure the ultimate ownership of assets (including business) in the RSA company or trust is vested in a non-resident offshore entity while certain assets could be directly owned by the offshore entity and avoiding the SA tax laws deeming certain offshore income or capital gains taxable.
2.6 Individuals can take out R11m per annum offshore via current exchange control regulations, while a company (after our restructuring process which will own the RSA asset, and the offshore entity will own the RSA company) can take up to R1bn offshore.
3. Advantages of holding ownership in RSA assets via an offshore structure:
3.1 Channel profits (via dividends) from an RSA company to the Mauritius Company and take advantage of a double taxation agreement (DTA) between South Africa and Mauritius and save 12% in dividends tax (5% in terms of the DTA instead of 20% and 3% tax in Mauritius).
3.2 Invest such profits or capital in global investments and in stronger currencies such as Dollars or Euros (including property) and receive tax free returns.
3.3 When selling interests of the offshore entity in RSA assets (or shares in a RSA company holding the asset), it can be effected without capital gains tax (CGT), or if fixed property or shares in a property holding company, with the right structure, CGT as low as 10% (instead of 22,4% for companies and 36% for trusts).
3.5 By becoming a foreign investor, utilize the provisions of the Protection of Investment Act 22 of 2015 or Bilateral Investment Treaty with Mauritius when land in the RSA is expropriated without compensation or for less than market value, by obtaining a compensation award from an international arbitration tribunal that is made a court order in South Africa against the state.
4. Advantages of utilizing the RSA company reconstruction procedures to affect the restructuring that incorporates an offshore structure:
4.1 No CGT (capital gains tax), transfer duty or Vat on transfer of the assets.
4.3 The restructuring procedures affords the continuing trading with the asset or business in the RSA, while ownership is effectively shifted offshore to a Mauritius company.
4.4 In case of fixed property, a notarial long-term lease can be entered into between the property holding company and the trading company, and registered against the title deed of the property, thereby affording protection when the property is expropriated by the state, who must honour the rights of a third party, including the lessee of the property.
5. How we can assist you:
5.1 We have a private consultation and discuss your current structure;
5.2 We can then design a structure that suits your situation and give you a quote on the implementation of the structures.
We can design a plan for you to restructure your RSA business and property interests and link them to a Mauritius structure. The restructuring utilises company structures in SA where capital gains tax and transfer taxes such as transfer duty
and VAT are saved, making the restructuring or reconstruction of your current structure very lucrative to be linked to a Mauritius offshore structure.
Son Safari program click here:
