AS PART of an international effort to restrict large multinational companies using low-tax jurisdictions to lower their tax bills, the government is introducing minimum corporate tax requirements on offshore multinationals doing business here and on South African multinationals doing business offshore, according to THE National Treasury’s 2024 Budget Review released yesterday.
The 2023 Budget Review outlined two pillars of the OECD/G20 Inclusive Framework on Base Erosion and Profit Sharing, endorsed by more than 135 countries in 2021.
The first pillar focuses on the consistent tax treatment of multinational companies in the digital economy and aims to ensure that the biggest and most profitable companies reallocate part of their profits to all countries in which their products and services are sold and utilised.
The second pillar introduces a global minimum tax. Any multinational company with annual revenue exceeding €750 million (R15.3 billion) will be subject to an effective tax rate of at least 15%, regardless of where its profits are located.
“Government proposes to effect this change – an income inclusion rule and a domestic minimum top-up tax – for qualifying multinationals from 1 January 2024,” THE Treasury said.
“The income inclusion rule will enable South Africa to apply a top-up tax on profits reported by qualifying South African multinationals operating in other countries with effective tax rates below 15%. The domestic minimum top-up tax will enable Sars (SA Revenue Service) to collect a top-up tax for qualifying multinationals paying an effective tax rate of less than 15% in South Africa.”
Two draft bills published yesterday for public comment, the Draft Global Minimum Tax Bill and the Draft Global Minimum Tax Administration Bill, are aimed at implementing these measures, which are expected to bring in revenue of about R8bn in 2026/27
BUSINESS REPORT