During the past few years, South Africa established a competitive headquarter tax regime, which was implemented with the primary goal of encouraging foreign direct investment in South Africa. An important secondary goal was for South Africa to be used as a Holding Company location through which multinational entities can invest into sub-Saharan Africa. Although the Headquarter Company regime was developed to prevent any direct losses to the fiscus, it did not create any direct benefits or advantages. Internationally, substance requirements have a two-fold purpose: to encourage resident tax entities to engage in active economic activities, and to prohibit income losses due to tax avoidance or evasion. Some of the most important substance requirements are set out in a country’s policies on permanent establishment, beneficial ownership and transfer pricing. Another effective manner to encourage economic activity is to offer tax incentives to activities usually associated with Headquarter Companies. These activities include, but are not limited to active management, granting loans, leasing, and the provision of intellectual property. This research concludes that the inclusion of substance requirements in headquarter tax legislation will not only directly benefit the fiscus, but it will indirectly benefit the economy as a whole. / Dissertation (MCom)--University of Pretoria, 2012. / Taxation / unrestricted

The South African government announced in 2008 that it intends to promote South Africa as a suitable company headquarter jurisdiction for investment in Africa in general and the sub-Sahara region in particular. The 2010 Taxation Laws Amendment Bill introduced a number of tax changes to lure headquarter companies to South Africa. The new South African headquarter company regime attempts to attract foreign direct investment through these changes. The government plans to make South Africa a gateway for African investments. In order to achieve this goal the regulatory, economic and legal frameworks need to be suitable for international investment. This study analyses the tax characteristics of an ideal holding company regime and investigate the importance that is placed on tax considerations compared to non-tax considerations by companies when faced with investment decision making and whether tax is a primary driver of such decisions. A single source ethnographic case study is used to analyse the process followed by an organisation, and the considerations used by the key decision makers within this organisation, for setting up a holding company in South Africa to drive an investment and business expansion. The case study consists of an investigation into the process followed, the strategy formulated and the structuring of the business for making the investment in selected African countries. It further investigates where the ultimate holding company will be located as a headquarter company for all further Africa business expansion. It was found that the tax considerations are mainly a favourable capital gains tax regime, low income taxes, no or low tax on dividends, a favourable tax treaty network, the absence of controlled foreign company legislation and a liberal thin capitalisation and transfer pricing regime. Non-tax factors also play a significant role in decision making when considering the investment destination. These factors include: economic and political stability; adequate physical, business, accounting and legal infrastructure; the absence (or limited presence) of bureaucratic obstacles; adequate communication channels; the ability to repatriate profits freely; an effective banking system; and the availability of an adequate dispute resolution mechanism. There is a definite distinction between tax specific strategies where enterprises are set up to take advantage of tax incentives provided by certain jurisdictions and where an investment decision is taken and aligned with business decisions to align these strategies to take advantage of a favourable tax regime Jurisdictions that only concentrate on tax incentives will find it difficult to attract foreign direct investment. Decision makers that are held responsible for investors’ capital will take tax as well as non-tax aspects into account when deciding to invest in a country and to set up holding company in that jurisdictions. It is therefore important for a jurisdiction to provide an environment that is conducive to do business in order to attract foreign direct investment. / Dissertation (MCom)--University of Pretoria, 2013. / lmchunu2014 / Taxation / unrestricted

Since the declaration of South Africa as the Gateway to Africa in 2010 by National Treasury, various changes have been made to South African legislation to make South Africa more attractive to foreign investors looking to expand their operations into Africa. The headquarter company regime was introduced with the purpose to provide a base from which these investments may be managed. From a tax perspective this regime eliminates or reduces specific taxes or rates of taxes for companies who elect to be classified as headquarter companies, provided that certain requirements are met. These requirements refer specifically to investments in qualifying foreign companies. The reference to foreign companies inevitably requires that the resident definition be considered. In South Africa residence of a person other than a natural person is the place where the company is incorporated, formed or established or the place of effective management which is a term subject to various interpretations. Regardless of the differences, all the interpretations refer to a senior level of management. Foreign incorporated companies with their place of effective management in South Africa are excluded from the definition should they qualify as controlled foreign companies with foreign business establishments subject to a high level of tax if the place of effective management is disregarded. The lack of skills in African countries as a product of shortfalls in the quality of education result in challenges to establish appropriately skilled management teams in these countries. When a centralised management team is set up at the headquarter company in South Africa the African subsidiaries risk being resident in South Africa and therefore the structure would not qualify for the benefits of the headquarter company regime. Further challenges arise when the exclusion to the resident definition is applied as shares held by a headquarter company are disregarded when the controlled foreign company status of the subsidiaries are determined. Therefore it is recommended that the headquarter company legislation be changed to correspond with successful regimes such as the Luxembourg and the Netherlands in that it does not only apply to foreign investment. It is further recommend that the resident definition be changed to exclude from the place of effective management test group structures that would comply with section 9I should the test be disregarded. / MCom (South African and International Tax), North-West University, Potchefstroom Campus, 2014

Since the declaration of South Africa as the Gateway to Africa in 2010 by National Treasury, various changes have been made to South African legislation to make South Africa more attractive to foreign investors looking to expand their operations into Africa. The headquarter company regime was introduced with the purpose to provide a base from which these investments may be managed. From a tax perspective this regime eliminates or reduces specific taxes or rates of taxes for companies who elect to be classified as headquarter companies, provided that certain requirements are met. These requirements refer specifically to investments in qualifying foreign companies. The reference to foreign companies inevitably requires that the resident definition be considered. In South Africa residence of a person other than a natural person is the place where the company is incorporated, formed or established or the place of effective management which is a term subject to various interpretations. Regardless of the differences, all the interpretations refer to a senior level of management. Foreign incorporated companies with their place of effective management in South Africa are excluded from the definition should they qualify as controlled foreign companies with foreign business establishments subject to a high level of tax if the place of effective management is disregarded. The lack of skills in African countries as a product of shortfalls in the quality of education result in challenges to establish appropriately skilled management teams in these countries. When a centralised management team is set up at the headquarter company in South Africa the African subsidiaries risk being resident in South Africa and therefore the structure would not qualify for the benefits of the headquarter company regime. Further challenges arise when the exclusion to the resident definition is applied as shares held by a headquarter company are disregarded when the controlled foreign company status of the subsidiaries are determined. Therefore it is recommended that the headquarter company legislation be changed to correspond with successful regimes such as the Luxembourg and the Netherlands in that it does not only apply to foreign investment. It is further recommend that the resident definition be changed to exclude from the place of effective management test group structures that would comply with section 9I should the test be disregarded. / MCom (South African and International Tax), North-West University, Potchefstroom Campus, 2014

Mauritius has, in recent years, become one of the preferred financial centres owing to its business-friendly economy, preferential tax regime, wide tax treaty network and solid infrastructure. The Mauritian economy and people have greatly benefitted from the country’s success as a financial centre. One benefit offered by the Mauritian tax regime is the ability and ease with which a person can gain residency to access the preferential tax rates that the country offers. South Africa has recently re-introduced a headquarter tax regime, which will make it a competitor with Mauritius for channelling international trade and foreign direct investment. Previous research focuses on the elements of international taxation and highlights some of the benefits that a company could enjoy by using Mauritius as an offshore base. One of the key elements of a successful headquarter company regime is that of a wide tax treaty network which offers preferential terms for taxing certain income classes. The aim of this study is to provide a theoretical construct for the comparison of double tax agreements, with the goal of identifying those that provide preferential terms for the taxation of certain income classes and the elimination of double taxation. This study focuses on the double tax agreements between South Africa, Mauritius and China, highlighting some of the deficiencies of the South African agreement with China and comparing those with Mauritius’s agreement with China. These deficiencies and the preferential tax regime that Mauritius offers will inevitably provide multi-national companies with tax saving opportunities if they use Mauritius as an offshore base. This study will point out some of the areas where possible tax saving opportunities could be identified. The study further aims to provide a platform from which the South African headquarter company regime can be assessed and analysed. This is specifically important if South Africa is to compete with Mauritius. AFRIKAANS : Mauritius het in onlangse jare een van die gekose finansiële sentrums geword as gevolg van hul besigheidsvriendelike houding, voordelige belasting regime, hul wye netwerk van dubbelbelastingooreenkomste en gevestigde infrastruktuur. Die ekonomie van Mauritius en Mauritius se bevolking het baie voordeel getrek uit die sukses van Mauritius se finansiële dienste sektor. Een van die voordele wat Mauritius se belasting regime bied is die gemaklikheid waarmee inwonerstatus bekom kan word en ‘n persoon toegang tot Mauritius se voordelige belastingkoerse kan kry. Suid-Afrika het soortgelyks verlede jaar ‘n internasionale hoofkantoor regime bekendgestel wat Suid-Afrika dus ‘n mededinger met Mauritius gaan maak ten opsigte van die kanalisering van internasionale fondse en buitelandse belegging. Vorige navorsing fokus op die beginsels van internasionale belasting en identifiseer voordele wat maatskappye kan geniet indien hulle van Mauritius gebruik maak as hul buitelandse basis. Een van die belagrike elemente van ‘n suksesvolle hoofkantoor maatskappy regime is dat die regime ‘n wye netwerk van dubbelbelastingooreenkomste bied en dat die dubbelbelastingooreenkomste voordelige terme vir die belasting van sekere inkomste klasse bied. Hierdie studie se doelwit is om ‘n teoretiese platform te vestig vir die vergelyking van dubbelbelastingooreenkomste met die oog om dubbelbelastingooreenkomste te identifiseer wat voordelige terme bied vir die belasting van sekere inkomste klasse en die eliminering van dubbele belasting. Hierdie studie fokus op die dubbelbelastingooreenkomste tussen Suid-Afrika, Mauritius en Sjina in ‘n poging om sekere van die tekortkominge van die dubbelbelastingooreenkoms tussen Suid-Afrika en Sjina uit te wys wanneer dit met die dubbelbelastingooreenkoms tussen Mauritius en Sjina vergelyk word. Hierdie tekortkominge en die voordelige belasting regime wat Mauritius bied sal multi-nasionale maatskappye die geleentheid bied om belastingvoordele te ontgin indien hulle van Mauritius gebruik maak as ‘n buitelandse basis. Hierdie studie sal van die areas identifiseer waar ‘n maatskappy moontlik belasting kan bespaar. Die studie poog ook om ‘n platform te bewerkstellig vir die analise en evalueering van die Suid-Afrikaanse hoofkantoor regime. Hierdie analise en evalueering is spesifiek belangrik indien Suid-Afrika met Mauritius wil meeding. Copyright 2011, University of Pretoria. All rights reserved. The copyright in this work vests in the University of Pretoria. No part of this work may be reproduced or transmitted in any form or by any means, without the prior written permission of the University of Pretoria. Please cite as follows: Van den Berg, A 2011,A comparative study of double tax agreements between South Africa, Mauritius and China, MCom dissertation, University of Pretoria, Pretoria, viewed yymmdd < http://upetd.up.ac.za/thesis/available/etd-03222012-172313 / > F12/4/180/gm / Dissertation (MCom)--University of Pretoria, 2011. / Taxation / unrestricted