South Africa Enacts Global Minimum Tax Law

South Africa Enacts Global Minimum Tax Law

South Africa Enacts Global Minimum Tax Law: Multinationals to File First Returns in 2026

In a landmark move to curb tax avoidance and ensure fair competition, South Africa has enacted the Global Minimum Tax Act, effective from January 1, 2024.

The government anticipates generating an additional R8 billion in revenue during the 2025/26 tax year through this legislation.

South Africa Enacts Global Minimum Tax Law: Key Provisions of the Act

The Act introduces a “Top-up Tax” targeting multinational enterprise (MNE) groups with global revenues exceeding €750 million.

If an MNE’s effective tax rate in any jurisdiction falls below the 15% threshold, the Act mandates a top-up to meet this minimum rate. This measure aims to prevent profit shifting to low-tax regions and promote equitable tax practices among nations.

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Compliance Timeline and Penalties

MNEs operating within South Africa are required to file their inaugural global minimum tax returns in 2026, covering the fiscal year ending December 2024.

Non-compliance carries significant penalties, with fines reaching up to R150,000 per month for each entity within the group. The South African Revenue Service (SARS) is actively enhancing its capacity to manage and enforce these new regulations.

Global Alignment and Future Outlook

This legislation aligns South Africa with the OECD’s Global Anti-Base Erosion (GloBE) Model Rules, reflecting a commitment to global tax reform initiatives.

The Act includes a “Transition Year” provision, allowing MNEs time to adjust their tax structures to comply with the new requirements.

As the global tax landscape evolves, South Africa’s proactive stance underscores its dedication to fostering a fair and transparent tax environment.

Multinational corporations are advised to assess their global tax positions and prepare for the upcoming compliance obligations to avoid substantial penalties.

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