South Africa

Last modified: 15/01/2025 07:44

Corporate taxation

	Rate
Corporate income tax rate
– Standard	27%*
– Qualifying companies in a special economic zone (SEZ)	15%
– Qualifying micro business (turnover tax)	0% – 3%
– Qualifying small business corporations	0% – 27%
– Gold mining companies	Variable
– Long-term insurers	0% / 27% / 30%
Capital gains inclusion rate	80%

* For years of assessment ending before 31 March 2023, this rate was  28%.

Residence: A company is considered South African (“SA”) tax resident if it is formed, incorporated, or established in SA or where its place of effective management (i.e. where key management/commercial decisions are, in substance, made) occurs within SA borders. Nevertheless, a company can be deemed to be non-SA resident where it is exclusively recognised as a resident of another country according to the provisions of a double taxation agreement (“DTA”).

Basis: SA has a residence-based tax system, which means SA tax residents are, subject to certain exclusions, taxed on their worldwide income, irrespective of where their income was earned. Non-residents, including companies operating through a branch or maintaining a permanent establishment within SA, are subject to tax on all SA-sourced income, including any gains made from the sale of immovable property (or an interest in SA immovable property).

Taxable income: The taxable income of a company consists of business/trading and passive income – Less any qualifying expenses; – Less any exempt income and allowable deductions; – Plus any capital gain levied at an effective rate of 21.6%.

Significant local taxes on income: No local government taxes on income apply to either SA-resident or non-resident companies.

Alternative minimum tax: Certain qualifying small companies may elect to pay tax on their turnover (being less than R 1 million) i.e. turnover tax, at a rate between 0% and 3%, as opposed to applying the normal corporate income tax rate of 27% to taxable income.

Taxation of dividends: Dividends received from SA companies are usually exempt from income tax, but they are subject to dividends withholding tax (“DWT”) levied at 20%, other than specific exceptions like the SA-company-to-SA-company exemption. Non-resident recipients may benefit from reduced rates under a DTA. The DWT is deducted from the declared dividend and remitted to the South African Revenue Service (“SARS”) by the distributing company. Where an SA resident receives a dividend from a foreign company, such dividends are, in principle, subject to tax at a minimum effective rate of 20%, although various exemptions exist.

Capital gains: Capital gains tax (“CGT”) is not a separate tax but forms part of income tax. Gains are included in the taxable income of a company at an inclusion rate of 80% of the total capital gain and which gain is effectively taxed at 21.6%. Corporate entities are not entitled to an annual capital gains exclusion as is the case with individuals.

Losses: Previously, an assessed loss (tax loss) incurred by a company in its business activities could generally be carried forward indefinitely and offset against future profits, provided the company remains operational. From the tax year ending on or after March 31, 2023, the legislation now restricts using assessed loss balances against taxable income. Only 80% of taxable income or R1 million, whichever is higher, can be set off from past assessed losses, with the remaining loss carried forward. It must be noted that losses incurred by a foreign branch of an SA resident company cannot offset income from SA sources due to ring-fencing rules. Anti-avoidance rules may apply to prevent the exploitation of tax losses through transactions entered into solely to utilise such losses.

Foreign tax relief: Subject to the applicable DTA, SA residents have the option to claim a rebate for foreign taxes paid on foreign-sourced income or a deduction for foreign taxes paid on SA-sourced income. To be eligible, the taxpayer must be an SA resident, and the income in question must be included in taxable income, with the foreign tax paid being non-recoverable. The rebate is capped at the total normal tax payable, while the deduction cannot exceed the income subject to foreign tax. Any excess foreign tax credit can be carried forward for up to seven years. Alternatively, the foreign tax may be permitted as a deduction when determining taxable income.

Participation exemption: SA has a participation exemption for foreign dividends and capital gains, subject to certain conditions. Foreign dividends are exempt from income tax if the shareholder, being an SA resident, holds at least 10% of the total equity shares and voting rights in the foreign company declaring a foreign dividend. An SA resident may dispose of shares in a foreign company, free from CGT, in which they hold an interest of at least 10% so long as that sale is made to an unrelated non-resident.

Holding-company regime: SA’s Headquarter Company (“HQC”) regime provides for a relaxation of the controlled foreign company (“CFC”) rules, an exemption from DWT, certain relief from transfer pricing provisions, and an exemption from withholding tax for interest on certain “back-to-back” lending arrangements. To qualify as an HQC, it must be SA resident, each shareholder must hold at least 10% of the HQC shares (i.e. cannot have more than 10 shareholders), 80% of the HQC assets must be qualifying, and 50% of its gross income must be made up as defined in the Income Tax Act, 58 of 1962 (“the Act”). A qualifying HQC will be treated as a foreign company for the CGT participation exemption, for the benefit of qualifying shareholders disposing of their interest in the HQC. A resident company may elect to be a HQC for a year of assessment if certain criteria are met.

Tax-based incentives: SA government departments offer an array of incentive schemes aimed at stimulating and facilitating the development of sustainable, competitive enterprises. Several incentive schemes seek to support the development or growth of these enterprises through the provision of either funding or tax relief. Most incentives are offered through the Department of Trade and Industry, with limited incentives provided by other government departments. Generally, these incentives fall under the following categories: – Investment and enterprise development incentives; – Competitive enhancement incentives; – Export incentives – non-industry specific; – Export incentives – industry specific; – Tax incentives; – Industrial development corporation (IDC) funding; and – Industrial participation incentives. There are tax-based incentives for entities involved in scientific or technological research and development, as well as businesses involved in mining, oil and gas, renewable energy, farming activities and manufacturing.

Group relief/fiscal unity: There is no group taxation regime applicable in SA. Group companies are taxed separately and an assessed loss of one group company cannot reduce taxable income of a separate group company. Under certain circumstances, the Act provides tax relief for certain transactions concluded between companies in a group, as defined (essentially there is a 70% shareholding requirement). Such relief may cover CGT, income tax, donations tax, DWT and VAT. Certain anti-avoidance provisions apply in respect of these rules. It must be noted that, for the purposes of these rules, the definition of a related group company excludes any company that does not have its place of effective management in SA.

Small company/alternative tax regimes: Alternative tax regimes apply in two different forms, to entities classified as a small business corporation (“SBC”) and entities classified as a micro business. An SBC is a close corporation, private company (other than a personal service provider) or personal liability company which: – the entity’s shareholding/membership is held by a natural person for the entire year of assessment (“YoA”); – the gross income does not exceed R20 million during the YoA; – none of the members/shareholders, at any time during the YoA, held shares in any other company, subject to various exceptions (e.g. listed companies, collective investment schemes, body corporates); – investment income and income from personal services together don’t exceed 20% of the total gross income and capital gains; and – if providing personal services, the entity must employ at least three full-time employees who are not connected to shareholders. SBCs are subject to a sliding scale tax rate based on their taxable income. This tax rate ranges from 0% to 27% (28% for years of assessment ending before 31 March 2023). Turnover tax offers a simplified tax system for micro businesses, replacing income tax and CGT. It’s available to sole proprietors, partnerships, and qualifying companies with an annual turnover below R1 million. Micro businesses can choose to register for VAT voluntarily. Tax rates for businesses opting into turnover tax vary based on turnover, ranging from 0% to 3%. Exiting the turnover tax system is only possible before the start of a new tax year.

Corporate taxation: compliance

Tax year: Normal tax (income tax) is calculated on an annual basis and covers the YoA (year of assessment). For companies and close corporations, the YoA ends on the same date as the financial year end of the company or close corporation.

Consolidated returns: There is no group taxation regime in SA and companies are taxed separately, with their respective returns are submitted accordingly.

Filing and payment: SA uses the provisional tax system as a method of levying income tax in advance, to ensure that the taxpayer does not have a large tax debt on assessment. Provisional tax is payable by all juristic taxpayers. Provisional taxpayers are required to submit two provisional tax returns during the tax year and make the necessary payment to SARS if a payment is due on the return. The first provisional tax return must be submitted within the first 6 months of the tax year and the second provisional tax return at the end of the YoA. A third provisional tax return (top-up payment) may be submitted, where necessary, and the related tax paid up to six months after the YoA has ended (seven months when the YoA ends on 28/29 February).

Penalties: Penalties, from a SARS perspective, can be levied in the form of an administrative penalty or as an understatement penalty. Administrative non-compliance penalties are imposed when a taxpayer fails to keep accurate records, fails to report reportable arrangements, does not comply with a request for information, obstructs SARS officials or fails to comply with tax obligations. The following non-compliance penalties may be applied: – Fixed amount penalties; and – Percentage-based penalties. Fixed amount penalties can be imposed by SARS for non-compliance with any procedural or administrative action or duty imposed or request, and include (but are not limited to): – Not registering with SARS, when required to; – Not informing SARS where there is a change in registration details; – Not filing returns; and – Not retaining records as required by SARS. Fixed-rate penalties are not applied if percentage-based or understatement penalties are applicable. These penalties are imposed monthly, ranging from R250 to R16,000 and can be levied up to 35 months if SARS has the current address of the taxpayer, or up to 47 months if not. If SARS determines that a taxpayer has not paid the tax as required under any tax act, a penalty based on a percentage is imposed. This penalty is equal to a percentage of the tax that remains unpaid, usually at a rate of 10%. However, there may be some exceptional situations concerning the non-payment of provisional tax. The understatement penalty is a percentage-based penalty charged when there is an understated amount of tax. It applies to all taxes and could be charged for failing to file a return, omitting or providing incorrect information in a return, or not paying the correct amount of tax. The penalty ranges from 0% to 200%, depending on the behavior that led to the error and whether or not the error was voluntarily disclosed. It does not apply if the error was made unintentionally.

Rulings: SARS issues various documents setting out how it will interpret and apply certain sections of its acts. These include, but are not limited to, the following: – Interpretation notes; – Binding Private Rulings; – Binding General Rulings; and – Guides.

Taxation of individuals

For the following year of assessment, the rates of income tax levied on individuals is as follows:

2025 Tax year (1 March 2024 – 28 February 2025)
Taxable Income (R)	Rates of Tax (R)
0 – 237 100	18% of taxable income
237101 – 370 500	42 678 + 26% of taxable income above 237 100
370 501 – 512 800	77 362 + 31% of taxable income above 370 500
512 801 – 673 000	121 475 + 36% of taxable income above 512 800
673 001 – 857 900	179 147 + 39% of taxable income above 673 000
857 901 – 1 817 000	251 258 + 41% of taxable income above 857 900
1 817 001 and above	644 489 + 45% of taxable income above 1 817 700

2024 Tax year (1 March 2023 – 29 February 2024)
Taxable Income (R)	Rates of Tax (R)
0 – 237 100	18% of taxable income
237101 – 370 500	42 678 + 26% of taxable income above 237 100
370 501 – 512 800	77 262 + 31% of taxable income above 370 500
512 801 – 673 000	121 475 + 36% of taxable income above 512 800
673 001 – 857 900	179 147 + 39% of taxable income above 673 000
857 901 – 1 817 000	251 258 + 41% of taxable income above 857 900
1 817 001 and above	644 489 + 45% of taxable income above 1 817 700

There are tax rebates available for individuals as below:

Tax Rebates
Rebates	2024	2025
Primary	R 17 235	R 17 235
Secondary (65 and older)	R 9 444	R 9 444
Tertiary (75 and older)	R 3 145	R 3 145

Residence: To be considered a tax resident in SA, an individual must be “ordinarily resident” in the country, which means they consider SA to be their true home based on the related facts and circumstances. Alternatively, an individual is a resident if they have been physically present in SA for more than 91 days during the current tax year and each of the preceding five tax years, as well as physically present in SA for a period exceeding 915 days in total over the preceding five tax years. However, these rules do not apply to a person who is deemed to be exclusively a resident of another country for purposes of the application of a tax treaty.

Basis: Subject to exceptions, SA residents are taxed on worldwide income, including capital gains. Non-residents are taxed on their SA-source income, and on capital gains from the disposal of SA immovable property (or an interest therein) and assets effectively connected with a permanent establishment in SA.

Taxable income: Taxable income comprises of gross income, less exempt income and allowable deductions, plus taxable capital gains (see below under “Capital gains”). Gross income from employment includes all remuneration in cash or in kind (based on prescribed conditions and valuation rules).

Capital gains: CGT is not a separate tax; rather, it is a part of income tax, and as such an individual’s net capital gain for the YoA is added to their taxable income. The CGT amount is equal to 40% of the net capital gain and is taxed at the individual’s applicable marginal rate. The general annual CGT exclusion for individuals is R 40,000. However, this amount increases to R 300,000 in the YoA when the individual passes away.

Deductions and allowances: General deductions are permitted under what is called the “general deduction formula”, subject to certain requirements. Donations to certain approved public benefit organisations (“PBOs”) are tax-deductible, generally limited to 10% of taxable income, and subject to carry-forward provisions. Individuals can deduct the amounts contributed to pension, provident, and retirement annuity funds during a tax year, up to a limit of 27.5% of the greater of your remuneration or taxable income. However, the maximum annual deduction threshold is R350,000. If you make contributions that exceed this limit, you can carry them forward to the following year. In addition, certain tax credits apply for medical expenses incurred by an individual, based on a taxpayer’s circumstances and age.

Foreign tax relief: Taxpayers may be entitled to a foreign tax credit (or deduction) for foreign tax paid where income from foreign sources (or from SA), has been subject to tax in a foreign country and is taxable in SA.

Taxation of individuals: compliance

Tax year: Income tax is calculated on an annual basis and covers the YoA. For individuals, estates and trusts, the YoA runs from 1 March and ends on the last day of February in the following year.

Filing and payment: Provisional tax must be paid by individuals who earn income from an unregistered employer or individuals who receive non-remuneration or non-allowance income under Section 8(1) of the Act. Provisional taxpayers must make two payments during the year. The first payment is due within the first six months of the YoA, and the second payment is due by the last day of the YoA. The provisional payments will reflect as a credit against the normal tax as finally assessed for that year. Persons (other than a company) who derive remuneration from an employer who is registered for pay-as-you-earn (“PAYE”, or employees’ tax, will have a portion of their remuneration withheld by the employer in relation to their normal tax payable. The PAYE withheld by the employer will reflect as a credit against the normal tax as finally assessed for that year. The period for filing income tax returns begins on the first day of July and typically extends until the end of November. Any returns not filed in that period may be subject to late payment penalties and/or attract interest on any amounts owing by the taxpayer to SARS.

Penalties: The same penalties regime applicable to companies applies to individuals. Penalties, from a SARS perspective, can be levied in the form of an administrative penalty or as an understatement penalty.

Administrative non-compliance penalties are imposed when a taxpayer fails to keep accurate records, fails to report reportable arrangements, does not comply with a request for information, obstructs SARS officials or fails to comply with tax obligations. The following non-compliance penalties may be applied:

– Fixed amount penalties; and

– Percentage-based penalties.

Fixed amount penalties can be imposed by SARS for non-compliance with any procedural or administrative action or duty imposed or request, and include (but are not limited to):

– Not registering with SARS, when required to;

– Not informing SARS where there is a change in registration details;

– Not filing returns; and

– Not retaining records as required by SARS.

Fixed-rate penalties are not applied if percentage-based or understatement penalties are applicable. These penalties are imposed monthly, ranging from R250 to R16,000 and can be levied up to 35 months if SARS has the current address of the taxpayer, or up to 47 months if not. If SARS determines that a taxpayer has not paid the tax as required under any tax act, a penalty based on a percentage is imposed. This penalty is equal to a percentage of the tax that remains unpaid, usually at a rate of 10%. However, there may be some exceptional situations concerning the non-payment of provisional tax. The understatement penalty is a percentage-based penalty charged when there is an understated amount of tax. It applies to all taxes and could be charged for failing to file a return, omitting or providing incorrect information in a return, or not paying the correct amount of tax. The penalty ranges from 0% to 200%, depending on the behavior that led to the error and whether or not the error was voluntarily disclosed. It does not apply if the error was made unintentionally.

Rulings: SARS issues various documents setting out how it will interpret and apply certain sections of its acts. These include, but are not limited to, the following:

– Interpretation notes;

– Binding Private Rulings;

– Binding General Rulings; and

– Guides.

Withholding taxes

Type of payment	Resident recipients		Non-resident recipients
	Company	Individual	Company	Individual
	Rate	Rate	Rate	Rate
Dividends (1)	0%	20%	20%	20%
Interest (2)	0%	0%	15%	15%
Royalties (3)	0%	0%	15%	15%
Entertainers and sportspersons (4)	0%	0%	15%	15%
Proceeds from sale of immovable property (5)	0%	0%	10%	7.5%
Management fees (6)	0%	0%	0%	0%

1. DWT is a tax that is charged on dividends declared by both resident and non-resident companies that are listed on the Johannesburg Stock Exchange (JSE). This tax is applicable, regardless of whether the shareholder is a resident or non-resident. The standard DWT rate is 20% and may be reduced as per the provisions of a relevant DTA. DWT does not apply to dividends paid by an HQC and certain other exempt bodies. In respect of dividends in specie (dividends in kind), the distributing company (not the shareholder) is liable for DWT. These dividends are subject to similar exemptions and treaty relief as cash dividends. Value transfers (deemed dividends) may be taxed under normal withholdings tax rules.
2. A withholding tax on interest is levied on interest paid to non-residents at a standard rate of 15%, which rate may be reduced in terms of the provisions of a relevant DTA. Certain exemptions apply including in respect of interest on government bonds, listed debt and debt owed by a local bank. It does not apply to interest paid to a non-resident individual present in SA for over 183 days or if the foreign person is registered as a taxpayer in SA and the debt is effectively connected to a Permanent Establishment in SA. 
3. A withholding tax of 15% applies to royalties paid to non-residents but can be reduced with a relevant DTA. It does not apply to royalties paid to a non-resident individual present in SA for over 183 days or if the foreign person is registered as a taxpayer in SA and the property for which the royalty is paid is effectively connected to a Permanent Establishment in SA.
4. A final withholding tax applies in respect of payments made to non-resident entertainers and sportspersons performing in SA. Failure to deduct or withhold tax or pay it to SARS will render the resident taxpayer making the payment personally liable for the tax.
5. A withholding tax is levied on the proceeds of sale of immovable property in SA by non-residents. Any taxes withheld will be regarded as an advanced payment of the non-resident’s CGT liability in relation to the sale of the immovable property for the year of assessment. The withholding tax will apply at different rates as follows:
   • Where the seller is an indivual, a rate of 7.5% will be applied;
   • Where the seller is a company, a rate of 10% will be applied;
   • Where the seller is a trust, a rate of 15% will be applied.
6. South Africa does not levy a withholding tax on management, service or technical fees paid to non-residents.

Branch remittance tax: No branch remittance tax applies in SA.

Anti-avoidance legislation

Transfer pricing: SA follows the Organisation for Economic Co-operation and Development (“OECD”) guidelines on transfer pricing and uses the arm’s length standard to test transactions between connected persons in an international (cross-border) transaction.

Allowable methods of determining the transaction price include:

– The comparable uncontrolled price method;

– The resale price method;

– The cost-plus method;

– The profit split method; and

– The transactional net margin method.

For years of assessment commencing on or after 1 October 2016, taxpayers with qualifying transactions must prepare transfer pricing policies and documentation. Where a qualifying transaction is not carried out on an arm’s length basis and results in a tax benefit, the taxable income of the person receiving the tax benefit must be calculated as if the transaction had been entered into on arm’s length terms. If a resident received the tax benefit, an amount equal to the adjustment is deemed to be a dividend in specie paid by the resident (if a company), or a donation paid by the resident (if a person other than a company). Compulsory transfer pricing documentation and reporting rules apply and qualifying taxpayers must file country-by-country reports, a master file, and a local file with SARS.

Interest restriction: Thin capitalisation provisions form part of the general transfer pricing rules and limit the deduction of interest payable by SA companies on debt provided by certain non-resident-connected persons. SA’s thin capitalisation rules also apply to local branches of foreign companies. Certain provisions in the Act restrict the deductibility of interest incurred on debt used to fund acquisition and re-organisation transactions. Additionally, there are provisions regulating the deductibility of interest in respect of a debt owed to a person that is not subject to tax in SA, where the funds are obtained directly or indirectly from a person who is in a controlling relationship (holding at least 50% of equity shares or voting rights) in relation to a debtor.

Controlled foreign companies: A CFC is any foreign company where SA residents directly or indirectly hold more than 50% of the total participation rights, more than 50% of the voting rights in the company, or (with effect from any year of assessment commencing on or after 1 January 2018) any foreign company whose financial results are reflected in the consolidated financial statements (as contemplated in IFRS 10) of any company that is a resident. Where the foreign company is deemed a CFC, the proportionate income of the CFC will be included in the income of the resident. The income of the CFC is to be determined as if the SA income tax applied to such entity. The CFC rules have specific conditions where exclusions from income attribution apply. For example, where foreign taxes paid by the CFC amount to 67.5% of the SA tax that would be payable if the CFC were a SA resident, or where the CFC’s net income is attributable to a genuine foreign business establishment.

Hybrid mismatches: The Act contains sections dealing with hybrid debt instruments, hybrid equity instruments and third-party backed shares. These sections are anti-avoidance sections and are aimed at ensuring instruments are correctly treated as debt or equity for tax purposes depending on their economic substance rather than their legal form.

Disclosure requirements: Certain arrangements are considered to be “reportable arrangements” for purposes of the Tax Administration Act No. 28 of 2011 (“TAA”), as amended. A participant to a reportable arrangement must disclose certain information to SARS within 45 business days of any qualifying arrangement or, on becoming a participant to that reportable arrangement, within 45 days from the date of becoming a participant, disclose the information. Failure to disclose may lead to financial penalties levied on a per-month basis. If one participant has already disclosed the reportable arrangement, the other participants are not obliged to make further disclosures, subject to obtaining a written statement from the disclosing participant that the reportable arrangement has been disclosed.

Exit taxes: Section 9H of the Act deems a person to have disposed of their assets, subject to certain exemptions, to a resident at market value on ceasing to be a tax resident in SA, ceasing to be a CFC or on becoming a HCQ. This deemed disposal may trigger income tax and CGT consequences in the hands of the relevant taxpayer.

General anti-avoidance rule: The Act contains a set of general anti-avoidance rules (“GAAR”) that set out the circumstances under which an arrangement constitutes an “impermissible avoidance arrangement” for tax purposes, and the consequences that flow from this. Generally, such an arrangement is one where the sole or main purpose is to obtain a tax benefit and either the transaction was carried out in a manner which would not normally be employed in the course of business, or lacks commercial substance.

Digital services tax and Other significant anti-avoidance legislation: Currently, the only tax imposed by SA on certain digital services comprises Value Added Tax (“VAT”) on certain “electronic services” under the Value Added Tax Act, 89 of 1991 (“VAT Act”).

Value-added tax/Goods and services tax

Type of tax: VAT is levied on the supply of goods and services in SA, on the importation of goods and on the supply of imported services in certain circumstances, with specific rules applicable to the supply of electronic services. Any SA VAT charged to a vendor by suppliers, as well as VAT levied on the importation of goods, will generally be deductible through an input tax credit available to the vendor. Vendors may claim the VAT element on expenditure incurred for the purposes of making taxable VAT supplies except in certain circumstances. Input VAT credits may not be claimed on expenditure incurred in relation to exempt supplies. The VAT system comprises of three types of supplies: – Standard-rated supplies: Supplies of goods and services subject to the VAT at the standard rate. – Exempt supplies: Supplies of certain services not subject to VAT. – Zero-rated supplies: Supplies of certain goods or services subject to VAT at zero percent.

Standard rate: 15% (14% prior to 1 April 2018).

Reduced rates: 0%

Registration: Enterprises with a turnover of R1 million or above in any period of 12 months are obliged to register for VAT. Enterprisers with a turnover of between R50 000 and R1 million in any 12 months, may voluntarily register for VAT. Enterprises with a turnover of less than R50 000 in any period of 12 months are not permitted to register for VAT.

Filing and payment: VAT returns are generally submitted on a bi-monthly basis unless turnover in any period of 12 months exceeds R30 million, in which case returns are submitted monthly. Certain entities may be obliged to submit returns annually or bi-annually. VAT returns are due for submission, and payment is due, on the 25th day (or the end of the month in certain circumstances) of the month following the month in which the VAT period ended. Any late payments are subject to penalties and interest.

Social security contributions

Both employers and employees are obliged to pay a monthly 1% contribution to SA’s Unemployment Insurance Fund (“UIF”). The contribution is based on a maximum (capped) monthly gross remuneration per employee of R17 712 per month. The employee’s contribution is made by the employer through a deduction form the employee’s salary.

Certain remuneration and certain employees are excluded from the UIF contribution requirements. 

Self-employed

There is no obligation on individuals who are self-employed to deduct a monthly contribution in respect of UIF.

Other taxes

Capital duty: Capital profits/losses are included in the taxable income of a taxpayer in accordance with the 8th Schedule of the Act.

Immovable property taxes: Refer to transfer tax section.

Transfer tax: Transfer Duty: Transfer Duty applies to transfers of immovable property ranging from 0% (on the value of property not exceeding R1 million) to 13% (on the value of property exceeding R11 million). Where the sale of fixed property attracts VAT, no transfer duty is payable. The indirect acquisition of residential property by way of the acquisition of shares in a company that holds residential property is subject to transfer duty. Securities Transfer Tax (“STT”): STT is levied at a rate of 0.25% on every transfer of securities issued by a company incorporated in SA, and by foreign incorporated companies listed on a licensed exchange. Transfers include the transfer, assignment or cession, or disposal in any other manner, of a security, but exclude any event that does not result in a change in beneficial ownership, the issue of a security, and the cancellation or redemption of a security where corporate existences is being terminated.

Stamp duty: There are no applicable stamp duties/taxes in SA.

Net wealth/worth tax: There are no applicable net wealth/worth taxes in SA.

Inheritance/gift taxes: Donations Tax:

Donations tax is payable on the value of any property that is disposed of by way of donation by a SA resident. No donations tax is payable on donations made by a natural person of up to R100 000 per annum.

Prior to 1 March 2018, a flat rate of 20% applied to the value of donations made. A lifetime limit on the aggregate value of donations made of R30 million was imposed from 1 March 2018 onwards. Donations tax will be levied at a rate of 20% on any donations made within the limit. Donations tax will be levied at a rate of 25% on the value of any donations over and above the limit of R30 million.

Donations tax is not payable in respect of the following donations:

– A donation to a spouse in terms of a registered ante-nuptial or post-nuptial contract;

– A donation between spouses who are not separated;

– A donation mortis causa;

– A donation under which the benefit only passes to the donee on the death of the donor; and

– A donation which is cancelled within 6 months of the date upon which it took effect.

Deemed donations (such as disposals for less than adequate consideration, or uncharged interest on low-interest loans) are also subject to donations tax. Anti-avoidance rules in the Act aim to prevent the avoidance of donations tax and estate duty through the transfer of assets to trusts (or companies held by trusts) on interest-free or low-interest loans.

Estate Duty: The general rule is that if the taxpayer is ordinarily resident in SA at the time of death, all of their assets (including deemed property), wherever situated, will be included in the gross value of their estate for the determination of duty payable thereon. Estate duty is levied at 20% on the first R30 million of the dutiable estate. Estate duty is levied at 25% of the dutiable estate in excess of R30 million.

The most important deductions to take note of are:

– Debts due at date of death;

– Bequests to various charities; and

– Bequests to surviving spouse.

The Act allows for a R3.5 million estate duty abatement. This abatement could rollover from the deceased to a surviving spouse, so that the surviving spouse can use a R7 million abatement on death. The portability of the deduction will apply to the extent that the first dying spouse did not use the whole abatement. There is relief from estate duty in the case of the same property being included in the estates of taxpayers dying within ten years of each other. The deduction is calculated on a sliding scale varying from 100% where the taxpayers die within 2 years of each other and 20% where the deaths are within eight to ten years of each other.

Other: Customs and Excise Duties Customs duties are levied on imported goods with the aim of raising revenues and protecting the local market and are usually calculated as a percentage of the value of the goods or according to measurable units ranging from 3% to 45%.

Excise duties and levies are imposed on certain locally manufactured goods as well as their imported equivalents. These duties and levies are self-assessed through periodic excise returns filed with and, depending on the product, paid to SARS either on a monthly or quarterly basis.

On 1 April 2018, a new Sugary Beverages Levy (SBL) came into effect, calculated at a rate of 2.1 cents per gram of sugar content exceeding 4 grams per 100 milliliters of specified imported and locally manufactured products. To date, the levy remains unchanged.

Mineral and Petroleum Resources Royalties: These royalties are triggered on the transfer of minerals extracted within SA. The rates for the mineral and petroleum resource royalties, payable in line with the corporate provisional tax cycle, are 0.5% – 5% for refined mineral resources, and 0.5% – 7% for unrefined mineral resources.

Carbon Tax (“CBT”): The Carbon Tax Act of 2019 came into effect on 1 June 2019. The CBT is assessed, collected and enforced as an environmental levy in terms of the Customs and Excise Act, 1964, read with the relevant provisions of the Carbon Tax Act, 2019 (“CTA”).

The CBT is imposed on entities in the country that operate emissions generation facilities at a combined installed capacity equal to or above the carbon tax threshold. The carbon dioxide equivalent of greenhouse gas emissions as defined in the CTA, are subject to CBT. The emissions that are subject to CBT are determined in accordance with either an approved reporting methodology of the Department of Environment, Forestry and Fisheries (DEFF), or the prescribed formulas in terms of the CTA. The current carbon tax rate is R144 per ton of carbon dioxide equivalent emissions from January 2022. The rate trajectory increases steeply from 1 January 2023 onwards (i.e. 2023 – ZAR 159, 2024 – ZAR 190, 2025 – ZAR 236, 2026 – ZAR 308, 2027 – ZAR 347, 2028 – ZAR 385, 2029 – ZAR 424, and 2030 – ZAR 462). Significant industry-specific tax-free emissions allowances apply during the first phase of implementation of this policy to provide current emitters time to transition their operations to cleaner technologies through investments in energy efficiency, renewables, and other low-carbon measures.

Tax treaties

SA has concluded DTAs with several countries and signed the OECD multilateral instrument on 7 June 2017. South Africa ratified the Base Erosion and Profit Shifting (“BEPS”) MLI in September 2022.