South African tax residents are subject to tax in South Africa on their worldwide income, whilst non-residents are subject to tax only on income that derived in South Africa. A non-resident is also subject to Capital Gains Tax on the disposal of fixed property (or an interest in such property) situated in South Africa.
A company, close corporation (i.e. a juristic person) or a trust is deemed to be a South African resident if:
The tax residency of a juristic person or a trust is also subject to Double Taxation Agreements South Africa has with various countries.
The taxable profit of most business entities is taxed at 28%. These entities include:
The taxable profit of Trusts (except for special Trusts) is taxed at 41%.
The assessed tax losses from prior years may be carried forward to the next year for set off against income from that year of assessment. The assessed loss may be carried forward as long as the taxpayer continues to carry on a trade.
Dividends tax is levied at shareholder level at a rate of 20% of the amount of any dividend paid by any company other than a headquarter company.
Dividends tax is only payable on dividends received from South African resident companies. Tax is charged at 28% on the taxable income derived from a South African branch or agency of a foreign company, subject to the provisions of a Double Taxation Agreement.
The resident individuals in South Africa are taxed by progressive tax rates, which are as follows:
|Taxable Income||Rate of Tax (R)|
|R 0 – R 195 850||18% of each R 1|
|R 195,851 – R 305,850||R 35,253 + 26% of the amount above R 195,850|
|R 305,851 – R 423,300||R 63,853 + 31% of the amount above R 305,850|
|R 423,301 – R 555,600||R 100,263 + 36% of the amount above R 423,300|
|R 555,601 – R 708,310||R 147,891 + 39% of the amount above R 555,600|
|R 708,311 – R 1,500,000||R 207,448 + 41% of the amount above R 708,310|
|R 1,500,001 and above||R 532,041 +45% of the amount above R 1,500,000|
|Taxable Income||Rate of Tax (R)|
|R 0 – R 189,880||18% of each R 1|
|R 189,881 – R 296,540||R 34,178 + 26% of the amount above R 189,880|
|R 296,541 – R 410,460||R 61,910 + 31% of the amount above R 296,540|
|R 410,461 – R 555,600||R 97,225 + 36% of the amount above R 410,460|
|R 555,601- R 708,310||R 149,475 + 39% of the amount above R 555,600|
|R 708,311- R 1,500,000||R 209,032 + 41% of the amount above R 708,310|
|R 1,500,000 and above||R 533,625 + 45% of the amount above R 1,500,000|
|Tax Rebates for Individuals||2019||2018|
|Primary rebate||R 14,067||R 13,635|
|Secondary rebate: 65 years and older||R 7,713||R 7,479|
|Tertiary rebate: 75 years and older||R 2,574||R 2,493|
* The rebate is reduced proportionately where the period of assessment is less than 12 months.
Capital Gains Tax is payable when a capital asset is sold or when there is a change in the ownership of the asset (actual or deemed disposal). Capital Gains Tax is included in the taxpayer’s taxable income at either 40% or 80% respectively. If a capital asset is sold at a profit, the profit is subject to Capital Gains Tax, and if it is sold at a loss, the capital loss can be set-off against other capital profits realised in that year or the capital loss is carried forward to the next year.
|Taxpayer||Inclusion Rate %||Statutory Rate %||Effective Tax Rate %|
|Individuals||40||0 – 45||0 – 18|
|Small Business Corporations||80||0 – 28||0 – 22.4|
|Branches of Foreign Companies||80||28||22.4|
|Trusts (special)||40||0 – 45||0 – 18|
|Public Benefit Organisations (if applicable)||80||28||22.4|
All persons who are residents of South Africa for income tax purposes will be subject to Capital Gains Tax on the disposal of their world-wide assets.
Non-residents will only be subject to Capital Gains Tax on the disposal of the following:
The effective tax rates for capital gains for different classes of taxpayers are as follows:
Certain exclusions may apply with respect to assets disposed of.
Transfer duty is a tax paid on the acquisition of fixed property situated in South Africa. The transfer duty is payable by the purchaser, and has to be settled within six months from the date of acquisition.
|Value of the Property||Rate of Transfer Duty|
|R 0 – R 900,000||0%|
|R 900,001 – R 1,250,000||3% of the value above R 900,000|
|R 1,250,000 – R 1,750,000||R 10,500 + 6% of the value above R 1,250,000|
|R 1,750,001 – R 2,250,000||R 40,500 + 8% of the value above R 1,750,000|
|R 2,250,001 – R 10,000,000||R 80,500 + 11% of the value above R 2,250,000|
|R 10,000,001 and above||R 933,000 + 13% of the value above R 10,000,000|
In respect of acquisition of property on or after 1 March 2016:
No transfer duty is payable if the transaction is subject to VAT at either the standard or the zero rate.
Where the ownership of a Trust, or the shares, or members interest of a company or close corporation, which owns residential property, comprising more than 50% of all assets (excluding any liabilities), is transferred, transfer duty will be chargeable on the market value of the property.
Transfers of property between spouses on divorce/death, or to heirs from a deceased estate are exempt from transfer duty.
Securities Transfer Tax is an indirect tax imposed on the transfer of any security issued by:
Securities Transfer Tax is levied at a rate of 0.25% of the taxable amount of that security. No Securities Transfer Tax is payable on the original issue of shares.
VAT is a tax on general consumption of goods and services. The standard VAT rate is currently 15%.
All supplies which take place in South Africa are subject to VAT at the standard rate, however, there are also supplies which are subject to VAT at the zero rate. Zero rating applies to certain supplies identified in section 11 of the VAT Act No. 89 of 1991 (the VAT Act), as well as, exempt supplies per section 12 of the VAT Act.
The South African government has signed an extensive number of Double Taxation Agreements with other countries. Each Double Taxation Agreement has its own withholding tax rate applicable to their country.
Refer to Appendix I for a table which shows the double taxation agreements between South Africa and other countries in relation to withholding tax.
With effect from 1 January 2015 the secondary adjustment will be the following:
South Africa has a self-assessment transfer pricing system (including thin capitalisation) that is based on the arm’slength principle. Currently the non-arm’s length portion is reclassified as a deemed loan (secondary adjustment). The deemed loan constitutes an affected transaction which implies that arm’s length interest is to be calculated on the deemed loan. The accrued interest on the deemed loan is capitalised annually for the purposes of calculating the balance of the deemed loan. The deemed loan and the interest calculated on it is deemed to be payable until the amount is regarded as having been repaid to the taxpayer.
Where the resident is a person other than a company, the adjustment is deemed to be a donation, which will trigger donations tax at the rate of 20%.