On December 24, South Africa’s Official Gazette published the Global Minimum Tax Act 2024, in both languages -English and Afrikaans. This new law implement the OECD’s Global Anti-Base Erosion (GloBE) rules as defined in the Pillar Two of the BEPS project. Specifically, the Tax Act new rules apply the principles of Income Inclusion Rule and Domestic Minimum Top-up Tax. The purpose of this law is to ensure a 15% global minimum tax on profits of domestic entities in multinational enterprise (MNE) groups, which have an annual turnover of at least 750 million euros in two of the last four financial years.
The law also excludes certain MNE groups from the Undertaxed Payments Rule and specifies which GloBE provisions don’t apply. It takes effect retroactively from January 1, 2024, and applies to fiscal years beginning on or after that date.
To read more on the publication of the Gazette, click here.
South Africa has introduced two bills to parliament aimed at implementing the OECD’s global minimum tax rules. These bills align with the OECD’s plan to reform international taxation and set a minimal company tax fee of 15% for multinationals incomes over €750 million ($815 million) yearly, known as Pillar Two. The legislation includes an income inclusion rule that adds a top-up rate for companies paying below the 15% threshold in any jurisdiction. Additionally, a domestic top-up tax will apply in South Africa to ensure compliance. The bills will not include a safe harbor provision for using existing tax information. If the bills will be approved, they will take effect retroactively from January 1, 2024.
To access the draft of the Bill, click here.