Main rate: 29%
Resident companies are taxed on their worldwide income; non-resident companies are taxed only on South African-source income. A company is resident if it is incorporated, established or formed in South Africa or its place of effective management is in South Africa. The tax rate is 29%, and the secondary tax on companies (STC) is imposed at 12.5% on distributions. Dividends paid within a group of companies (70% holding) are exempt from STC, subject to election. The tax rate for foreign companies operating through a branch or agency in South Africa is 34%. Special rules apply to gold mining and insurance companies.
Progressive rates to 40%
Resident individuals are taxed on their worldwide income; non-residents are taxed only on their South African-source income. An individual is resident if present in South Africa for more than 91 days in the relevant tax year and the five preceding years, and for more than 915 days in the aggregate in the preceding five tax years. A person is also resident if “ordinarily resident”, ie if the person’s settled home or main residence is in South Africa. Income tax is charged at progressive rates to 40%. Dividends received by a resident individual from a South African company are generally exempt.
Gains are taxed in part as income
Capital gains tax is charged at the normal corporate or individual tax rates on 50% of the gain realised by a company and 25% of the gain realised by an individual. Non-residents are only liable for capital gains tax on the disposal of immovable property in South Africa, the disposal of shares in a real property company or the disposal of assets by a permanent establishment in South Africa. Individuals are exempt from gains on the sale of their primary residence, up to a value of ZAR 1.5m.
VAT standard rate: 14%
Value-added tax (VAT) applies to most transactions at the 14% standard rate. Zero-rating applies to exports, international transport, some basic foodstuffs, some farming goods and certain fuels. Exemptions include some financial services, residential rents, domestic passenger transport and educational services.
Registration is compulsory for businesses with a turnover above ZAR 300,000.
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