“foreign financial instrument holding company” ……….

[Definition of “foreign financial instrument holding company” substituted by section 49 of Act 45 of 2003, amended by section 32 of Act 32 of 2004, substituted by section 37 of Act 31 of 2005, section 28 of Act 20 of 2006, amended by section 32 of Act 8 of 2007, section 25 of Act 3 of 2008 and section 61 of Act 7 of 2010 and deleted by section 54 of Act 43 of 2014 effective on 20 January 2015]

 “foreign investment entity” means any person other than a natural person-

(a)     that is not incorporated, established or formed in the Republic;

(b)     the assets of which consist solely of a portfolio of one or more of the following:

(i)      amounts in cash or that constitute cash equivalents;

 

(ii)     financial instruments that-

 

(aa)   are issued by a listed company or by the government of the Republic in the national, provincial or local sphere; or

 

(bb)   if not issued by a listed company or by the government of the Republic in the national, provincial or local sphere, are traded by members of the general public and a market for that trade exists;

 

(iii)    financial instruments, the values of which are determined with reference to financial instruments contemplated in subparagraph (ii); or

 

(iv)    rights to receive any asset contemplated in subparagraph (i), (ii) or (iii),

 

which amounts, financial instruments and rights are held by that person for investment purposes;

(c)     where no more than 10 per cent of the shares, units or other form of participatory interest in that person are directly or indirectly held by persons that are residents; and

(d)     where that person has no employees and has no directors or trustees that are engaged in the management of that person on a full-time basis;

‘foreign partnership’, in respect of any year of assessment, means any partnership, association, body of persons or entity formed or established under the laws of any country other than the Republic if-

(a)     for the purposes of the laws relating to tax on income of the country in which that partnership, association, body of persons or entity is formed or established-

(i)      each member of the partnership, association, body of persons or entity is required to take into account the member’s interest in any amount received by or accrued to that partnership, association, body of persons or entity when that amount is received by or accrued to the partnership, association, body of persons or entity; and

 

(ii)     the partnership, association, body of persons or entity is not liable for or subject to any tax on income, other than a tax levied by a municipality, local authority or a comparable authority, in that country; or

[Subparagraph (ii) substituted by section 3 of Act 25 of 2015 effective on 31 Deccember 2015]

(b)     where the country in which that partnership, association, body of persons or entity is formed or established does not have any applicable laws relating to tax on income-

(i)     any amount-

(aa)    that is received by or accrues to; or

(bb)    of expenditure that is incurred by,

the partnership, association, body of persons or entity is allocated concurrently with the receipt, accrual or incurral to the members of that partnership, association, body of persons or entity in terms of an agreement between those members; and

(ii)     no amount distributed to a member of a partnership, association, body of persons or entity may exceed the allocation contemplated in subparagraph (i) after taking into account any prior distributions made by the partnership, association, body of persons or entity;

“foreign return of capital” means any amount that is paid or payable by a foreign company in respect of any share in that foreign company where that amount is treated as a distribution or similar payment (other than an amount that constitutes a foreign dividend) by that foreign company for the purposes of the laws relating to-

(a)     tax on income on companies of the country in which that foreign company has its place of effective management; or

(b)     companies of the country in which that foreign company is incorporated, formed or established, where that country in which that foreign company has its place of effective management does not have any applicable laws relating to tax on income,

but does not include any amount so paid or payable to the extent that the amount so paid or payable-

(i)      is deductible by that foreign company in the determination of any tax on income of companies of the country in which that foreign company has its place of effective management; or

(ii)     constitutes shares in that foreign company;

“foreign tax year”, in relation to a foreign company, means any year or period of reporting for foreign income tax purposes by that company or, if that company is not subject to foreign income tax, any annual period of financial reporting by that company;