Global Daily Tax News, South Africa Enacts Global Minimum Tax Act, (Jan 6, 2025)

On December 24, 2024, South Africa published the Global Minimum Tax Act (Act No. 46 of 2024) in its Official Gazette.

The legislation provides for the retroactive implementation of the OECD's Pillar Two multinational minimum top-up tax framework from January 1, 2024, including:

• the income inclusion rule (IIR); and

• a domestic minimum top-up tax.

Based on the OECD's Global Anti-Base Erosion Model Rules (GLoBE) rules, the framework seeks to ensure the application of a minimum tax rate of at least 15 percent on the corporate profits of South African in-scope entities.

In addition, the IIR provides for the application of South African tax on South African entities' overseas operations where that income is subject to a rate below 15 percent and that other territory does not operate a domestic minimum top-up tax.

The GloBE Model Rules apply to MNE Groups that have a consolidated annual revenue of at least EUR750m in at least two of the four fiscal years immediately preceding the tested fiscal year. The fiscal year is the period covered by the MNE Group's consolidated financial statements.