TAX REASONS FOR ESTABLISHING A HEADQUARTER COMPANY

Authors

  • Thabo Legwaila

DOI:

https://doi.org/10.17159/obiter.v32i1.12312

Keywords:

Headquarter companies, manage investments, centralize the income, tax instruments, tax liability, after tax earnings

Abstract

Headquarter companies are generally interposed between the ultimate holding company and the operating subsidiaries of a group of companies. The functions of a headquarter company are mainly to manage investments and to centralize the income of the group prior to remittance to the ultimate holding company. Therefore, generally, the rationale for setting up a headquarter company is based on economic and structural needs of the group in which the headquarter company is to be set up. However, it is also common cause that the decision to set up a headquarter company is, more often than not, influenced by the need to take advantage of tax instruments available in the particular jurisdiction. This allows the group to reduce its overall tax liability and therefore increase its after tax earnings.

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Published

15-09-2021

Issue

Section

Articles

How to Cite

TAX REASONS FOR ESTABLISHING A HEADQUARTER COMPANY. (2021). Obiter, 32(1). https://doi.org/10.17159/obiter.v32i1.12312