The Global Minimum Tax Act, 2024, 51830 dated 24 December 2024 has been officially gazetted in South Africa with retrospective effect to apply for tax years starting from 1 January 2024. This Act aligns with the OECD’s Pillar Two framework under the Base Erosion and Profit Shifting (BEPS) project. The law adopts the GloBE (Global Anti-Base Erosion) Rules developed by the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting.
The Act introduces a global minimum tax rate of 15%, targeting large multinational enterprises (MNEs) with consolidated annual revenues exceeding EUR 750 million.
A Multinational Enterprise’s (‘MNE’s) operations in South Africa may be liable for the Top-up Tax if their global effective rate falls below 15%. and secondly for a Domestic Minimum Top Up Tax (DMTT) on the profits of foreign inbound MNEs with low taxed Constituent Entities which are branches, subsidiaries or joint ventures situated in South Africa.
A Domestic Constituent Entity of an MNE Group or a Designated Local Entity, amongst others, must submit a GloBE Information Return to the Commissioner.
The Tax Administration Act provides that the first due date for filing returns and for payment to be made is 18 months after the end of the financial year which commenced in 2024.
Should these broad parameters apply to your company and you would like more information on application of the Global Minimum Tax Act, 2024 please contact Roxanna Nyiri at Transfer Pricing Business Solutions.