Foreign business to pay tax of 15%

GLOBAL RULES: EXPECTED TO YIELD ADDITIONAL R8BN

- Ina Opperman

Multi-national 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 limit the negative effects of tax competition. According to the preamble of the Global Minimum Tax Act, its purpose is to provide for the introduction of the Global Anti-Base Erosion (GloBE) Rules in SA and the imposition of Top-up Tax.

The GloBE Rules are designed to ensure large multinationals pay a minimum level of tax on their income in each jurisdiction where they operate, as part of the solution to address the tax challenges of the digital economy.

The Organisation for Economic Cooperation and Development (OECD), which sets international standards for the promotion of economic growth and sustainable development, developed the GloBE Rules.