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.