Taxation of offshore hybrid entities: The South African perspective
Date
2014-08-13
Authors
Tlale, Louisa
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Abstract
This research report examines how the classification and taxation of offshore hybrid
entities from a South African tax perspective compares to international approaches. It
analysis the concept of hybrid entities, discusses the issues arising from the use of these
entities in cross-border activities. It then examines international approaches as
recommended by the Organisation for Economic Co-operation and Development
(‘OECD’) and adopted by selected jurisdictions to compare with the foreign partnership
legislation introduced into the South African tax system. The conclusion reached is that
the South African classification and taxation of hybrid entities is aligned with some
international approaches but consideration has to be made to the practical application of
this legislation in order to eliminate any further uncertainties. It also recommends
consideration for a balance between anti-avoidance and international competiveness for
the South African investor.