An engineering company operating across Africa approached us with a retirement issue where the majority shareholder wanted to retire and to transfer his shareholding to the incoming management team. The client also wished to re-evaluate its general company structure as it has expanded significantly and wanted to identify a flexible tax-optimised structure while also resolving any tax risks.
• Ensure a tax efficient and effective way to transfer shares to incoming shareholders .
• Identify an optimal structure for the business going forward where tax for the shareholders can be used utilised.
• Ensure a sustainable and tax-optimised retirement income flow for the outgoing shareholder.
• A clear road map on how to move from current structure to the proposed structure and how to mitigate key tax risks going forward.
A gradual sale of the shares to the incoming shareholders via a loan agreement.
Establishment of a Holding Company which will hold the new shareholders shares and assist with future governance and tax efficiency.
Identifying how best to ensure compliance with local transfer pricing laws and optimisation of dividend distributions to minimise withholding tax obligations.
• Reducing the tax burden where the phased share transfer structure will allow the client to reduce immediate Capital Gains Tax while still securing retirement income.
• Compliance and risk mitigation where all transactions meet the regulatory requirements which reduces risk associated with transfer pricing and Controlled Foreign Company rules.
• Ensure efficient business succession where the heirs will assume gradual control of the business while maintaining financial flexibility.
• Future expansion flexibility where the structure enables future strategic growth.
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