South Africa

Non-residents of South Africa are subject to tax on income derived from a source in South Africa. SA branches of foreign companies are not considered to be separate legal entities for tax purposes, and no tax is withheld on transfers of profits to the head office. Branches of foreign companies are taxed at a rate of 28% (for tax years ending before 31 March 2023) and are not liable for dividends tax or any branch profits repatriation tax. The CIT rate is reduced to 27% for tax years ending on or after 31 March 2023.

Note that a branch must register as a taxpayer and submit tax returns. Separate financial statements must be drawn up for the SA branch. For all practical purposes, the SARS will treat the branch as a separate entity. For example, inter-branch cost recoveries levied by the head office incurred in the production of SA income normally will be allowed as a deduction by the branch, although this treatment is not extended to interest on inter-branch loans.

In terms of DTAs, the taxation of branches is limited to cases where the branch constitutes a PE.