Loop Structures allow for residents to form offshore structures which can then be used for a variety of purposes including investment, share acquisition, loans and assets to re-invest into the resident jurisdiction thereby creating a loop. Previously these were not allowed in South Africa.
From the 1st of January 2021 these are now permitted. Formally South African individuals and/or companies could only hold up to 40% collectively with other South African residents in offshore entities. However, this limit has been completely removed allowing for 100% holding. The reason for this amendment is to promote inward investments into South Africa.
Whereas there are regulatory obligations applicable depending on the purpose of the entity and there are specific tax concerns applicable to loop structures in order to protect the South African tax base it does open up alternatives for investment even though these should be very carefully considered in light of reporting and tax impediments.