What Is the Global Minimum Tax?
The Global Minimum Tax is an OECD-led initiative that establishes a minimum corporate tax of 15% globally for multinationals with revenues exceeding €750 million. This mechanism is intended against tax base erosion and profit shifting to low-tax jurisdictions, promoting greater international tax fairness.
Effects on South Africa
Due to the introduction of the Global Minimum Tax Act 2024, South Africa must adjust its tax framework significantly. This amendment will primarily affect multinationals operating in the country, as they will have to re-evaluate their tax structures to ensure that their effective tax rate is no lower than 15% and thus avoid applying supplementary taxes.
Key Amendments for Companies
- Alignment with international standards: South Africa must modify its tax policies to comply with OECD standards.
- Increased transparency: Multinational companies must report more detailed information on their income, taxes paid, and global operations.
- Potential tax costs increase: If a company does not meet the 15% threshold, it could face additional adjustments in South Africa or its parent jurisdiction.
Recommendations for Companies
- Assess the tax effects: Analyze how this measure would affect the tax and financial structure.
- Strengthen documentation: Make sure to have clear and consistent reporting on your global operations.
- Consult with experts: Tax advice is essential to adapt your strategy to the new regulations.
TPC Group Assistance
At TPC Group, we understand the challenges of implementing the Global Minimum Tax. Our experienced Transfer Pricing team is at your disposal to assist you in complying with the new international tax requirements.
Contact us for further information!
Source: Mondaq
