Middle East Tax Restructuring Advice – Lighting Design Provider

• We advised on the optimal structure for holding and financing the group operating companies based in Saudi Arabia, Qatar, Lebanon, Portugal (the “OpCos’) in a tax-efficient manner, including direct and withholding tax implications of the operating structure.
• Subject to the commercial, legal, and regulatory requirements associated with this type of operations, the tax objective for any recommended group structure addressing the following key issues:
  • Minimizing the incidence of local taxation in the operating countries;
  • Minimizing withholding taxes on investment returns i.e. interest, dividends, management charges, and royalties (if any);
  • Optimizing tax relief for interest and other financing costs, as appropriate;
  • Reducing the Group cash tax burden and unnecessary tax arising on repatriation of cash to investors;
  • Ascertaining a tax-efficient exit from the investments.
• We commented on the tax implications of repatriating income from the operating companies up to the recommended holding structure (“HoldCo”) in Qatar. In particular, we commented on:
  • The withholding tax implications and on applicable double tax treaties on remittance of income, including interest, dividends, royalties, and services fees;
  • The conditions and procedure to obtain a tax residence certificate for the HoldCo to avail double tax treaty benefits.
• We provided a summary of the CIT implications of any interest, dividends, or services fees income received by the HoldCo, which included:
  • Consideration of tax incentives which the HoldCo can benefit from and underlying conditions for availing such incentives;
  • Broad risks of incentive disqualification and related substance and administrative requirements.
• We provided practical recommendations on how to build substance at the level of the HoldCo to avoid tax residency risk in foreign jurisdictions and ensure the applicability of double tax treaties.
• We advised on capital gains tax implications upon the shares transfer of the OpCos to the HoldCo and upon future exit from the HoldCo.
• We provided practical recommendations on how to build substance at the level of the HoldCo and avoid tax residency risk in foreign jurisdictions and ensure the applicability of double tax treaties.