SA gains traction as regional HQ

Legislation in the pipeline may make it more attractive for logistics, freight and other companies serving the Southern African region to set up their head offices in South Africa, according to Anton Lockem, partner in Shepstone & Wylie Attorneys. “Notwithstanding South Africa’s economic footprint in Africa, it has not always been the preferred choice in which to register a Regional Holding Company (RHC) for access into the rest of Africa,” he says. The decision of where to register an RHC is to a large extent dependent on factors such as its political stability, investment protection and tax regime, the treaty network the country has with other countries in the region and exchange control. “In recent times certain Southern African Development Community countries have attracted foreign investment through the establishment of regional holding companies and many South African entities regard these countries as real investment alternatives, mainly due to the flexible exchange control environment and the provision of tax incentives. “Possibly to counter this challenge, Treasury by way of the Taxation Laws Amendment Bill 2010, has introduced proposals to make South Africa a more attractive destination of choice for RHCs,” he says. The legislation is aimed at addressing tax “disincentives” identified by Treasury. “Perhaps the time has now also come to provide more exchange control flexibility, particularly as far intellectual property transfers and the no-exception application of the looping prohibition are concerned,” says Lockem.