The Global Minimum Tax Act will ensure multinational companies operating in South Africa pay a minimum tax rate of 15% on their earnings, regardless of where profits are generated. This measure aims to curb tax competition and strengthen the corporate tax base in South Africa.
The Global Minimum Tax Act will allow South Africa to tax big multinationals paying tax of less than 15% on their earnings in their home countries. Multinational companies operating in South Africa will now have to pay a minimum global corporate tax rate of 15% after the president assented to the Global Minimum Tax Act published in the Government Gazette on 24 December.
This is part of government’s plans to implement a global minimum corporate tax to limit the negative effects of tax competition., its purpose is to provide for the introduction of the Global Anti-Base Erosion (GloBE) Rules in South Africa and the imposition of Top-up Tax. The GloBE Rules introduce a global minimum tax, designed to ensure that large multinational enterprises pay a minimum level of tax on their income arising in each jurisdiction where they operate, as part of the solution for addressing the tax challenges of the digital economy. The Organisation for Economic Cooperation and Development (OECD), an international body that sets international standards for the promotion of economic growth and sustainable development, developed the GloBE Rules.Enoch Godongwana, minister of finance, said in his budget speech in parliament last year that multinational corporations with annual revenue exceeding €750 million will be subject to an effective tax rate of at least 15% regardless of where their profits are generated. “The proposed reform is expected to yield an additional R8 billion in corporate tax revenue in 2026/27. The draft Global Minimum Tax Bill aims to limit the race to the bottom of effective corporate tax rates for large multinationals, with countries competing to attract income by offering low tax rates and tax incentives.” He said implementing the minimum tax in South Africa will bolster the corporate tax base. South Africa helped develop tax rules to address base erosion and tax challenges arising from the digitalisation of the economy as a member of the Steering Group of the OEC
GLOBAL MINIMUM TAX SOUTH AFRICA MULTINATIONAL COMPANIES OECD TAX REVENUES
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