One of the welcome announcements by the Minister of Finance in
his budget speech delivered in February this year, pertained to a
potential further relaxation of the Financial Surveillance
Department of the South African Reserve Bank's
(“SARB”) prohibition against so-called
“loop” structures. However, this came with a caveat,
this relaxation (or possibly scrapping) would coincide with
amendments to the tax laws to curtail the mischief that loop
structures attempt to prevent.
A loop structure is, broadly, a structure where a resident of
the Common Monetary Area (“CMA”) holds
an investment in a foreign vehicle which, in turn, holds an
investment in the CMA. Note that this investment could be in the
form of a share or loan. The SARB regards this type of transaction
as a contravention of the Exchange Control Regulations in that they
result in or have the potential to result in the direct or indirect
export of capital abroad to a non-resident company or other
relevant
