Company: KARO
Filing Date: 2025-06-09
Form Type: 20-F
Source: 0001213900-25-052372
Chunk: 155

Company: Karooooo Ltd.
Filing Date: 2025-06-09
Form: 20-F
Item: Item 10
Chunk 155
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 gross assets) consists of assets that produce, or are held for the production of,
passive income, or (ii) 75% or more of its gross income consists of passive income. For purposes of the above calculations, a non-U. S.
corporation that owns, directly or indirectly, at least 25% by value of the shares of another corporation is treated as if it held its
proportionate share of the assets of the other corporation and received directly its proportionate share of the income of the other corporation.
Passive income generally includes dividends, interest, certain rents and royalties, and gains from the sale or exchange of investment
property. Cash is generally a passive asset for these purposes. Goodwill and other intangible assets are generally characterized as active
assets to the extent they are associated with business activities that produce active income.

Based on the composition of our
income and assets and the value of our assets, including the estimated value of our goodwill and other intangible assets, we believe that
we were not a PFIC for our taxable year ended February 28, 2025. However, our PFIC status for any taxable year is an annual factual determination
that can be made only after the end of that year, and depends on the composition of our income and assets and the value of our assets
from time to time (including the value of our goodwill and other intangible assets, which may be determined in part by reference to the
market price of the ordinary shares, which has been, and could continue to be, volatile). We hold a significant amount of cash and cash
equivalents and our PFIC status for any taxable year may also depend on how, and how quickly, we use them. Because the value of our goodwill
and certain other intangible assets may be determined by reference to our market capitalization, we could become a PFIC for any taxable
year if the price of our ordinary shares declines significantly while we hold a substantial amount of cash, cash equivalents and financial
investments. In addition, the application of the PFIC rules is subject to certain uncertainties and the proper characterization of some
of our income and assets is not entirely clear. Accordingly, there can be no assurance that we will not be a PFIC for our current or any
future taxable year.

If we are a PFIC for any taxable
year and any entity in which we own equity interests is also a PFIC (any such entity, a “ Lower-tier PFIC”), U. S