Income tax for foreign owned companies.

[Ruan]

Hi to all

Hope you all had a blessed and happy new year.

I have been appointed to start up a branch for a Finland based company in SA.I have not been living or working in SA for the last 10 years and come from a tech background so my knowledge is very limited when it comes to SA tax laws.We are in the consulting business so VAT should not be an issue.

My questions are as follows.
What will be the best registrations CC or Ltd?
What will be the tax rates if all shareholders are foreign?
What type of financial liabilities will there be?

Thanks

BR
Ruan

[BusFact]

I reply to your questions as a non tax expert, but below is my understanding of the situation:

- CC is cheaper, but the Finland's company's owners will have to own the new company as individuals as a company cannot own shares in a cc - only natural persons or trustees. You may have to go for the more expensive pty ltd (private company) option which requires an annual audit still.

- I don't think the tax rates are different for foreign shareholders.

- The financial liability question is a bit vague .... it all depends on what you commit to. The registration process itself is cheap for a cc at a few hundred Rand with the pty probably running into a few thousand and the audit fee after a year.

PS. I'm assuming you turnover won't be too high. If it does get high, I do believe you will be forced to register for VAT.

[Dave A]

I found this summary rather informative.

For the most part, the local trading entity will be taxed in SA as a local entity. I think you'll find the tax rates quite favourable. What is troubling me is I recall there was a 5% withholding tax on dividends paid offshore somewhere along the line and that page doesn't seem to deal with it.
There's also reasonably significant changes in the wind as to how dividends are taxed.
Then there's the issue of whether there is a double tax agreement between Finland and South Africa.

My advice would be to contact the South African Embassy in Helsinki for specific information on the likely tax implications.

[Ruan]

Thank you.

[Ruan]

Thank you

Thank you

Its been very informative.

BR

Ruan