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South Africa: Budget Speech 2022 – Proposed changes to the controlled foreign company regime

23 February 2022
– 1 Minute Read


Various changes have been proposed to the controlled foreign company (CFC) legislation, including the following:

  • Updating terms used in the CFC legislation to align with the Insurance Act that came into effect on 1 July 2018.   
  • Updating the net income calculation contained in section 9D(2A) to include the fact that CFCs are residents for purposes of section 10(1)(l).  In other words, the royalty exemption contained in section 10(1)(l) will not apply to a CFC.
  • Updating the intra-group CFC dispensation to extend these provisions to ensure that these rules also exclude from attribution income that is generated from instruments that generate returns that are reclassified as income under the hybrid equity instrument rules.