Abstract:
This article analyses the implications of the income tax provisions introduced to address the potential tax avoidance that could arise from the
lifting of the exchange control restrictions on 'loop structures' which were effected from 1 January 2021. Most South Africans and foreign
investors do not quite understand the operation and implications of exchange controls due to the complexity of these regulations, and the
perception that it is difficult to move money in and out of South Africa. Since the removal of exchange control restrictions on loop structures
does not apply to existing unauthorised loop structures, this paper also provides a broader understanding of the operation of exchange
controls regarding loop structures. The article first explains the administration of exchange controls and how the restrictions of exchange
controls on loop structures have been relaxed over the years, and then it explains the 2021 removal of the restriction on loop structures as
well as the amendments to the Income Tax Act to curtail tax avoidance risks.
