Page 30 - Nexia SAB&T Business in South Africa Guide 2024

TAXATION IN SOUTH AFRICA

The SA Tax regime is set by the National Treasury and managed by the South
African Revenue Service (SARS). The National Budget Speech is delivered in
parliament on the last Wednesday in February each year, where announcements
and proposals are made affecting taxation in SA, and how funds are planned to
be spent by the Government.

Double Taxation Agreements
The tax liability of a foreign company depends on the nature of the income derived
by it, as well as the existence of a double taxation agreement. SA has agreements
with most of its trading partners to prevent double taxation of income accruing
to South African taxpayers from foreign sources, or of income accruing to foreign
taxpayers from South African sources. In terms of these arrangements a foreign
resident will be taxed in SA only if it conducts business through a permanent
establishment in SA (there are a few exceptions such as withholding taxes). Any
person who is deemed to be a resident of another state through the application
of a double tax agreement will not be treated as a South African resident.

Other Key Facts on Taxation in South Africa
Partnerships are not recognised as separate entities for income tax purposes.
Each individual partner is taxed separately on his share of the partnership profits.
There is no group taxation in SA – each company is taxed as a separate taxpayer.
The financial year end for individuals is end of February every year. Companies
may select their own financial year end. Companies who derive their income from
mining, gold mining, oil and gas, and farming may receive special dispensations.
Residence Based Tax
South Africans are taxed on their worldwide income, subject to certain exclusions.
Foreign taxes on that income are allowed as a credit against South African tax
payable. This is applicable to individuals, companies, CC’s, trusts and estates.

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