By: Dr Charl du Toit
Two minutes with Charl du Toit, Partner – Tax Advisory
My team deals with families who require more than traditional trust and estate planning. More often than not there is a corporate structuring element involved in our mandate – whether that’s a privately owned business or passive holdings. Our clients frequently require a greater depth of tax expertise.
It sounds obvious but a clear understanding of the tax system is key. That means understanding not only the tax rules but also the surrounding tax compliance and filing requirements in a given jurisdiction. South Africa is one of the few countries that still have exchange control rules which can be a bigger challenge when it comes to international restructuring.
When it comes to paying tax now or deferring it in a structuring scenario there is no right or wrong answer. If in doubt it is better to defer for the simple reason that you can earn income on the tax you would have paid. On the other hand, if you are sitting on an investment with no growth potential, it is inadvisable to defer. In that scenario we would advise you to pay your tax and reconsider your investment options.
South Africa continues to attract offshore start-ups. We have a good financial, legal and accounting sector and many see the potential for growth here. A large proportion of our clients are from an entrepreneurial background. Previously the client base was dominated by certain sectors like mining, whereas today we work with executives across various sectors, albeit often with a tech angle.
Coronavirus’ impact on travel is a big tax issue for businesses and individuals. Economic tax substance - the requirement for a business to have an economic presence in an offshore jurisdiction – and tax residency relies on global movement. We are seeing governments applying relief but rules differ internationally and are complex to navigate.
Tax is catching up with the future. For over 100 years, international corporate tax has been based on ‘bricks and mortar’ businesses and physical presence, not reflective of advances in technology and the digital economy. Although difficult to apply in practice, controlling bodies are determined to move forward with digital taxation and to ‘level the playing field’.
Charl is a Partner in our Tax Advisory Division and specialises in Corporate International Tax. Prior to joining the Group in 2019, Charl held a position as a tax partner at PricewaterhouseCoopers (PwC), where he was one of the three founding members of the PwC Western Cape tax department the 1980s.
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