Deneys Reitz Taxmail: Beware the new definition of “group of companies”

Section 41 of the Income Tax Act (“the Act”) currently defines a “group of companies” as a group, defined in section 1 of the Act and provides that any company shall not form part of a “group of companies” if, inter alia, that company is incorporated under the law of any country other than the Republic i.e. a foreign company.

For the purposes of the corporate reorganisation rules contained in Part III of the Act, the definition excluding a foreign company, will become effective from 1 January 2009. The law recognises a “group of companies” as two or more companies in which one company (referred to as the “controlling group company”) directly or indirectly holds shares in at least one other company (“the controlled group company”) to the extent that –

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