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Financial Services

According to latest reports issued by Statistics South Africa and the World Bank, the services sector (financial Services particularly) is the biggest contributor to the South African Economy. It also follows that the sector is one of the key contributors to the tax revenue of South African and a key area of interest for the government. Taxation of the sector has evolved through the years with the introduction of specific rules in relation to structured financing with special anti-avoidance measures in place in relation to certain hybrid instruments, third party backed shares amongst other changes. The tax implications of interest, debt raising costs and fair value gains/losses incurred on certain financial instruments require special attention due to the unique laws that are applicable. Our experienced tax team can assist with transaction advice on the tax implications of your finance structure, we can review the tax efficiency of current financing instruments in place and propose an efficient solution.

If you are looking to expand into the African region using South Africa as a gateway/head office we can advise on a financing/capital structure that is tax efficient for the whole group and is in-line with the in-country laws.

Our experience in this area includes

  • Advising on appropriate controls when foreign loans are used to finance assets currently under construction,
  • Review legal financing documents and advise on the tax implications ( compliance and financial reporting implications)
  • Review inter-company loan agreements and advise on the tax implications for the group
  • Tax implications using preference shares versus other ordinary shares when financing asset acquisitions including group restructuring
  • VAT apportionment matters that are generally associated with financial services