Jurisdictions that have traditionally been seen as tax havens and that fall within the EU are affected by the requirements, which essentially aim to eliminate “shell” companies established simply for tax purposes. South Africans with businesses or structures in these jurisdictions may need literally to “put people on the ground” to meet the requirements.
At an Isle of Man roadshow in South Africa, Basil Bielich, a partner with Peregrine Corporate Services on the island, defined “substance” as the need for “an entity that attracts profits to be directed and managed in the jurisdiction, with adequate staff, premises and activities in the jurisdiction commensurate with its activities”.
Colin Bird, a partner with Maitland, which also has a presence on the island, said there is likely to be an uptick in activity relating to the Isle of Man (and other affected jurisdictions) in the wake of the revised substance rules.
“Entrepreneurs and families will need to consult service providers as to substance requirements, the relevance of structures, and in some cases this may even lead to increased emigration to the Isle of Man.”