South Africa

A South African (SA)-resident company is subject to CIT on its worldwide income, irrespective of the source of the income. Non-residents are taxable on SA-source income.

For tax years ending before 31 March 2023, the CIT rate applicable to the corporate income of both resident and non-resident companies is a flat 28%. This rate is reduced to 27% with effect for years of assessment ending on or after 31 March 2023.

Small business corporations that meet the requirements (including only natural persons as members/owners and with gross income of not more than 20 million South African rand [ZAR]) are taxed at the following rates for tax years ending on any date between 1 April 2025 and 31 March 2026:

• 0% on the first ZAR 95,750 of taxable income.
• 7% on taxable income above ZAR 95,750 but not exceeding ZAR 365,000.
• ZAR 18,848 + 21% on taxable income above ZAR 365,000 but not exceeding ZAR 550,000.
• ZAR 57,698 + 27% on taxable income exceeding ZAR 550,000.

Special CIT rates apply in certain industries, such as gold mining and long-term insurance (see below).

Alternative turnover-based tax for very small companies

To reduce the compliance costs for very small companies, a turnover-based presumptive tax is available. Companies with a turnover of less than ZAR 1 million per year can elect to pay this tax instead of normal CIT, at a rate ranging from 0% to 3%, depending on the level of turnover.

Dividends tax

Dividends tax is imposed at 20% on dividends declared and paid by all resident companies as well as by non-resident companies in respect of shares listed on a South African exchange.

Dividends are tax exempt if the beneficial owner of the dividend is an SA-resident company, SA-retirement fund, or other prescribed exempt person.

The tax must be withheld by the company that pays the taxable dividend or, where the dividend is paid by a ‘regulated intermediary’, by the regulated intermediary (generally, this applies to listed shares). In the case of in specie dividends (i.e. dividends paid 'in kind’ or dividends other than dividends paid in cash), the company declaring the in specie dividend is liable for the dividends tax (and not the beneficial owner of the dividend).

Exemptions from dividends tax and treaty-imposed reduced rates only apply if the beneficial owner of the dividend has made a prescribed declaration and undertaking to the paying company or regulated intermediary.

CIT for mining companies

Special rates of normal tax, based on a standard formula, are prescribed for companies mining for gold. Companies mining for other minerals are subject to the same rate of normal tax that applies to ordinary companies.

CIT for long-term insurance companies

Life insurance companies are required to follow the ‘five-funds approach’, with policies divided into five funds, depending on the nature of the beneficiary. Each fund is then allocated assets according to the risk carried by the fund. Each of the five funds is treated as a separate taxpayer and taxed at the rate applicable to that type of fund. These rates are 30% for individual policyholder funds, 0% for untaxed policyholder funds, and the standard CIT rate for company policyholder funds, risk policy funds, and corporate funds (a corporate fund being the company itself).

Pillar Two

South Africa enacted domestic legislation, namely the Global Minimum Tax Act and the Global Minimum Tax Administration Act, to implement the Organisation for Economic Co-operation and Development’s (OECD’s) Pillar Two global minimum tax rules effective for fiscal years beginning on or after 1 January 2024. The rules apply to multinational enterprise (MNE) groups with annual consolidated revenue of at least 750 million euros (EUR; approximately ZAR 15 billion), in line with the OECD's framework.

South Africa's regime includes the following key elements:

• Income Inclusion Rule (IIR): South African parent entities of in-scope MNE groups are required to pay a top-up tax where the effective tax rate (ETR) on foreign operations is below 15%. The IIR is designed to closely follow the OECD Model Rules.
• Domestic Minimum Top-up Tax (DMTT): A domestic minimum top-up tax applies to all South African constituent entities of in-scope foreign MNE groups, ensuring that income arising in South Africa is subject to an ETR of at least 15%. The DMTT is intended to qualify as a 'Qualified Domestic Minimum Top-up Tax' (QDMTT) under the OECD framework.
• Safe harbours: Transitional country-by-country reporting (CbCR) safe harbours are available, potentially exempting qualifying groups from top-up tax and detailed Pillar Two calculations for a limited period, provided certain conditions are met.

Notably, the Undertaxed Profits Rule (UTPR) is not included in the legislation.

Administration and compliance

• Registration and filing: In-scope groups must submit a GloBE Information Return (GIR) to the South African Revenue Service (SARS) within 15 months of the end of each relevant fiscal year (or 18 months for the first year in scope). A designated local entity may file on behalf of all domestic constituent entities. If a GIR is filed in another jurisdiction with which South Africa has a qualifying competent authority agreement, local filing may not be required, but notification to SARS is still necessary.
• Payment: The top-up tax must be paid by the same deadline as the GIR filing. There are no provisional payment requirements; payment is due in full upon submission of the return.
• Penalties and record-keeping: Administrative penalties of up to ZAR 50,000 may apply for non-compliance, with higher penalties if unpaid top-up tax exceeds ZAR 5 million or ZAR 10 million. Records must be retained for at least seven years.

For more detailed information and the most recent updates, please visit PwC’s Pillar Two Country Tracker.

Local income taxes

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