On the 3rd November 2015 the South African Revenue Service (SARS) issued an Interpretation Note in order to clarify the tax residence of a company based on its place of effective management (POEM). The residence of a company is a very sensitive issue as if considered resident it is not only the South African income that it is liable to be taxed on, but also its worldwide income.
The following is used to identify if a company is resident in South Africa:-
– If the company is incorporated in South Africa
– If the head office or senior management are in South Africa
– If the place of key management or commercial decisions take place in South Africa
– If board meetings regularly take place in South Africa
It has been stressed that the Interpretation Note No 6 is a guideline only and that when in doubt the POEM will be determined on a case by case basis taking into account a number of different factors.
If you are concerned over resident rules in relation to your company with reference to South Africa or indeed any other jurisdiction please do not hesitate to contact us for clarification.