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.”
Bird said Maitland was seeing an increased level of interest in the migration of entities to the Isle of Man as a jurisdiction offering the skills and well-regulated environment to meet the new substance requirements.
Nick Preskey of the Isle of Man government’s Department for Enterprise said: “The strong relationship between South Africa and the Isle of Man started in the late 1800s, with many Manx miners being drawn to South Africa. These pioneers made a contribution to the growth of South Africa and, in turn, nowadays many South Africans contribute to the growth of the Isle of Man.
“There is a thriving South African community, which makes up about 7% of the island’s population, with strong business connections. There is a stable and safe environment in which entrepreneurs, families and businesses can find a home from home.”