Is an en-commandite partnership a tax-efficient vehicle in the current private equity regime with the focus on Investments in South Africa?
type: CreativeWork
description: Private equity (PE) firms often use different investment vehicles to attract high-net-worth individuals and institutional investors to invest with them, as after-tax returns are generally higher than the formal investment sector. A question that arose during a discussion with the head of tax of a large insurance company was: Is an en-commandite partnership a taxefficient vehicle in the current private equity regime? The purpose of this dissertation is to determine whether the benefits of en-commandite partnership outweighed other forms of investment vehicles with regard to flow-through of income. It also dealt with the elimination of entity-level tax, while protecting investors from personal liability for the debts and obligations of the fund. This paper firstly investigated the characteristics of the most common investment vehicles, and the legislative requirements that they are subjected to. Secondly, the tax regime that applies to these investment vehicles was investigated. It included the financial instruments used by PE firms and how different applications of these instruments are treated by the tax authorities. This was done to determine if, when, and how these instruments were taxed as income or capital, and in whose hands they were taxed. This also covered the potential pitfalls PE firms had to be aware of when structuring investment transactions. This was followed by a conclusion to the question: Is an encommandite partnership a tax-efficient vehicle in the current private equity regime with the focus on investments in South Africa? The study includes a comparative analysis of the legislative and tax consequences of the investment vehicles as well as the benefits that could be derived from each. High-net-worth individuals and institutional investors often seek investment opportunities where they are prepared to take a higher investment risk with the objective to achieve a higher return on their investments. They can either invest in ventures and manage the …
abstract: Private equity (PE) firms often use different investment vehicles to attract high-net-worth individuals and institutional investors to invest with them, as after-tax returns are generally higher than the formal investment sector. A question that arose during a discussion with the head of tax of a large insurance company was: Is an en-commandite partnership a taxefficient vehicle in the current private equity regime? The purpose of this dissertation is to determine whether the benefits of en-commandite partnership outweighed other forms of investment vehicles with regard to flow-through of income. It also dealt with the elimination of entity-level tax, while protecting investors from personal liability for the debts and obligations of the fund. This paper firstly investigated the characteristics of the most common investment vehicles, and the legislative requirements that they are subjected to. Secondly, the tax regime that applies to these investment vehicles was investigated. It included the financial instruments used by PE firms and how different applications of these instruments are treated by the tax authorities. This was done to determine if, when, and how these instruments were taxed as income or capital, and in whose hands they were taxed. This also covered the potential pitfalls PE firms had to be aware of when structuring investment transactions. This was followed by a conclusion to the question: Is an encommandite partnership a tax-efficient vehicle in the current private equity regime with the focus on investments in South Africa? The study includes a comparative analysis of the legislative and tax consequences of the investment vehicles as well as the benefits that could be derived from each. High-net-worth individuals and institutional investors often seek investment opportunities where they are prepared to take a higher investment risk with the objective to achieve a higher return on their investments. They can either invest in ventures and manage the …
author: Ueckermann, Francois
keywords: Taxation
date published: 2023
date modified: 2026-07-22T22:22:44Z
provider: University of Cape Town
publisher: Networked Digital Library of Theses and Dissertations
type: WebPage
source organization: Department of Finance and Tax

PropertyValue
property ID: Handle
value: http://hdl.handle.net/11427/38191