It is proposed that the corporate income tax rate for foreign companies with domestic income be reduced from the current 33% to 28%. The move was widely expected with the abolishment of Secondary Tax on Companies and the introduction of the Dividends Tax. It was long regarded that the higher foreign company tax rate of 33% was discriminatory under the provisions of certain Double Tax Agreements entered into by South Africa.
Given the unexpected jump in the Dividends Tax rate from 10% to 15% the effective tax rate of a foreign company in South Africa may be more beneficial than that of a locally incorporated entity. Could we see a surge in branch operations in South Africa as a result of this amendment?
Written by Ruaan van Eeden, Tax Director, Cliffe Dekker Hofmeyr
EMAIL THIS ARTICLE SAVE THIS ARTICLE FEEDBACK
To subscribe email subscriptions@creamermedia.co.za or click here
To advertise email advertising@creamermedia.co.za or click here
