Tax implications of liquidating a corporation
From the look of things, there are no plans to include loss-makers, SAA and SA Express, onto this list of non-core assets. After all, it wouldn’t make sense to inject billions into SAA and SA Express only to then sell them.Perhaps, he has set his sights on liquidating the listed stakes owned by the government through entities such as the Industrial Development Corporation.In an economy stuck in a recession, they should be no-brainers.However, getting them off the ground will be Gigaba’s toughest test.Assuming that he chooses to be bold, and goes for the jugular and places certain companies up for outright sale, he will have to convince labour, which has been bruised by retrenchments, to buy into his plan. Even in its current divided state, labour is likely to put up a fierce fight, and the SA Federation of Trade Unions, which is led by Zwelinzima Vavi, will find this a worthy cause to fight.This would be a typical battle to fight than trying to oust President Jacob Zuma.
On the face of it, these two interrelated projects – disposing of non-core assets and partnering with the private sector – sound sensible and straightforward, and they are long overdue.The technical process he outlined in the 14-point plan is sound, and perhaps a tad too ambitious.This is understandable given the pressure that he is under to get South Africa back on a growth path.The PSPs are government-speak for a bid to partner with the private sector on areas that are traditionally the domain of the private sector such as rail freight, airports and general economic infrastructure.
His work includes elaborating broader guidance on sectors or asset classes for PSP and deciding whether sector specific PSP frameworks are needed.Judging by his 14-point plan, he appears to be readying himself for one of the most bruising battles his career has ever, witnessed with vested interests, especially labour and business elements, within civil society.