Acquiring a website outside SA using a SA business

[hj007]

Hi,
If I wanted to acquire a website from the likes of empireflippers or another broker, would it be possible to acquire it via a SA pty? or would it be only feasible to buy it in personal name?

Asking in the context of paying for it and excon - is it even possible to buy it with an SA company? - we're talking >R50k, but less than R1m here so I can't just pretend it's an expense on company credit card, would want to treat it as an asset for CGT etc.

My accountant isn't an excon expert - so their response was to pay out the cash as a dividend, pay the taxes and then just take personal cash, externalise it with SDA and then use that money to acquire it. I'd prefer to do it via my business so I can write off related business expenses such as hosting and outsourcing wages through the existing business etc.

It feels that a website/online assets should be easier to acquire by an SA business since there are no physical assets, just domain names and logins? Or is it the same excon headache as for acquiring a private company?

Tx

 

[neoprema]

you can do a normal forex transaction if empireflippers will invoice you? If its a business transaction, and its for a business, why bring your personal finances into it?

 

[hj007]

you can do a normal forex transaction if empireflippers will invoice you? If its a business transaction, and its for a business, why bring your personal finances into it?

Would there an excon implication/approval required though if I'm acquiring an asset outside SA using a pty?

 

[JayM]

Would there an excon implication/approval required though if I'm acquiring an asset outside SA using a pty?

If it's just the domain, site & login info, I think you'd be able to effect payment by just submitting the invoice to your bank. Technically, purchasing intellectual property requires an excon approval but for that amount I don't think they'd bother.

Slightly dodgy, but you you could just buy it in your personal capacity and sell it to your company afterwards.

 

[Snyper564]

If it's just the domain, site & login info, I think you'd be able to effect payment by just submitting the invoice to your bank. Technically, purchasing intellectual property requires an excon approval but for that amount I don't think they'd bother.

Slightly dodgy, but you you could just buy it in your personal capacity and sell it to your company afterwards.

This, its likely a preauthorised transaction that the bank (authorised dealer) would just approve. If you cannot just buy it the bank will assist with the excon approval on your behalf but they would be able to guide you.

 

[hj007]

If it's just the domain, site & login info, I think you'd be able to effect payment by just submitting the invoice to your bank. Technically, purchasing intellectual property requires an excon approval but for that amount I don't think they'd bother.

Slightly dodgy, but you you could just buy it in your personal capacity and sell it to your company afterwards.

Thanks, that makes sense - I'm guessing it will be as much of a headache to resell it at a later stage . The plan being to buy a starter business website or two from the brokerages for say $10k-$20k initially, then resell if I grow it a bit or buy a larger one.

Business is hard enough without all this SA excon and IP complexity $%!#%...

 

[JayM]

Thanks, that makes sense - I'm guessing it will be as much of a headache to resell it at a later stage . The plan being to buy a starter business website or two from the brokerages for say $10k-$20k initially, then resell if I grow it a bit or buy a larger one.

Business is hard enough without all this SA excon and IP complexity $%!#%...

Completely agree, excon has been a nightmare for me over the past 10 years. They have become slightly less restrictive recently though - it used to be much worse.

 

[hj007]

Completely agree, excon has been a nightmare for me over the past 10 years. They have become slightly less restrictive recently though - it used to be much worse.

Is being a 50% co-shareholder of a company in the UK or US (Delaware or whatever people are using) alongside a UK/US local an option too? Colleagues/friends mention that they've done this but I am a bit concerned it isn't quite so simple for us SA-tax residents..

 

[Snyper564]

Is being a 50% co-shareholder of a company in the UK or US (Delaware or whatever people are using) alongside a UK/US local an option too? Colleagues/friends mention that they've done this but I am a bit concerned it isn't quite so simple for us SA-tax residents..

Once you start messing with this you throw some serious international tax complexities in.

You start needing to consider
- Place of effective management
- Controlled foreign companies
- Wear the wrong hat at the wrong time even permanent establishment issues

 

[hj007]

Once you start messing with this you throw some serious international tax complexities in.

You start needing to consider
- Place of effective management
- Controlled foreign companies
- Wear the wrong hat at the wrong time even permanent establishment issues

Thanks - is this an SA issue, or an issue regardless of residency - or just because if you get it wrong we have more to lose as a higher tax region than say residents from a low tax residency? Just seems we have some more onerous rules in general?

 

[Snyper564]

Thanks - is this an SA issue, or an issue regardless of residency - or just because if you get it wrong we have more to lose as a higher tax region than say residents from a low tax residency? Just seems we have some more onerous rules in general?

Regardless of residency these are greater international tax issues almost applicable everywhere.

OECD is driving massive issues to reduce things like base erosion and profit shifting so you need legit operations in those foreign countries and not just a "postbox"

I do advise that you get proper advice if you start dabbling in the realm of foreign structures as they can cost you more than they are worth esp to smaller ops.

 

[hj007]

Regardless of residency these are greater international tax issues almost applicable everywhere.

OECD is driving massive issues to reduce things like base erosion and profit shifting so you need legit operations in those foreign countries and not just a "postbox"

I do advise that you get proper advice if you start dabbling in the realm of foreign structures as they can cost you more than they are worth esp to smaller ops.

Definitely will get advice. At the moment just want to find how the SA pty can do it and deal with Excon, but happy to do it as an SA tax payer.