The South Africa National Treasury announced in a June 5 media statement that the government intends to introduce draft legislation providing that issuance of shares by a South African resident company as consideration for shares in a foreign company will no longer be subject to capital gains tax. The amendment would be applied retrospectively to April 1, 2014, the government said.
The amendment will be included in 2015 draft Taxation Laws Amendment Bill, which will be published for public comment in the first half of July 2015, the government said.
The National Treasury also said it will propose anti-avoidance measures later this year which would be applicable from June 5. The measures will provide that the disposal of foreign shares by South African residents to connected persons will not benefit from the participation exemption.
Also, upon ceasing to be tax resident in South Africa, any participation exemption benefits previously enjoyed by a South African resident during the previous three years would be subjected to tax, the government said.
Written comments on the proposals are requested by June 26.
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