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February 21, 2024

South Africa announces implementation of the global minimum corporate tax

  • South Africa will implement the global minimum corporate tax with effect from years of assessment commencing on or after 1 January 2024.
  • Two measures, namely the Income Inclusion Rule and a Domestic Minimum Top-up Tax, will be used to implement the global minimum corporate tax.

South Africa's Minister of Finance indicated in the 2024 Budget Review on 21 February 2024 that South Africa will be implementing the global minimum tax with effect from years of assessment commencing on or after 1 January 2024. The National Treasury predicts that implementing the global minimum tax will bolster South Africa's corporate income tax base by approximately 8 billion South African Rand (ZAR8b) in 2026/2027.


The Global Anti-Base Erosion (GloBE) Model, also known as the global minimum tax, provides for a coordinated and comprehensive system of minimum taxation, aimed at ensuring that large multinational enterprise groups (MNE Groups) pay a minimum level of tax on their income in respect of every jurisdiction in which they operate.

The GloBE Model Rules were released by the Organisation for Economic Co-operation and Development (OECD)/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS) in December 2021 and are supported by a Commentary, released in March 2022. The Commentary is intended to promote a consistent and common interpretation of the GloBE Model Rules, facilitating coordinated outcomes for both tax administrations and MNE Groups.

The global minimum tax ensures that any MNE Group with annual revenue exceeding €750m will be subject to an effective tax rate of at least 15%, regardless of where its headquarters, operations, sales or profits are located.

The proposals contained in the South African Draft Global Minimum Tax Bill are designed to follow the GloBE Model Rules and Commentary, and stipulate that the Top-up Tax be imposed under:

  • An Income Inclusion Rule (IIR) that taxes the domestic entity of an MNE Group on its allocable share of Top-up Tax arising in respect of the low-taxed income of any foreign group company in which it has a direct or indirect ownership interest
  • A Domestic Minimum Top-up Tax (DMTT) that imposes a joint and several tax liability on the domestic entities of an MNE Group for any Top-up Tax arising in respect of low-taxed income of those domestic entities (calculated on an aggregate basis but only with respect to entities located in South Africa)

A separate Draft Global Minimum Tax Administration Bill has also been released that deals with the administrative aspects of the proposed tax. The Bill proposes to introduce, by reference, the administrative provisions of the GloBE Model Rules in South Africa, while locating them within the existing legislative framework provided by the Tax Administration Act, 2011.

The National Treasury and South African Revenue Service (SARS) invite comments on the Draft Global Minimum Tax Bill and the Draft Global Minimum Tax Administration Bill by 31 March 2024.

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Contact Information

For additional information concerning this Alert, please contact:

Ernst & Young Advisory Services (Pty) Ltd.

Ernst & Young LLP (United States), Pan African Tax Desk, New York

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

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