South African Revenue Service (SARS) is anticipated to gather tax revenue totalling R1.73.4 trillion for 2023/24, which is R56.1 billion lower than the 2023 budgeted revenue. This shortfall is largely attributed to the decline in corporate profits and revenue from taxes on mining.
In the upcoming 2024/25 fiscal year, the projected main tax revenue is an impressive R1.863 trillion, amounting to 25.0% of the Gross Domestic Product (GDP). This figure is contingent on South Africa achieving an average of 1.6% economic growth between 2024 and 2026.
The Treasury's accurate economic projection significantly impacts tax revenue collection. The tax-to-GDP ratio is forecasted to reach 25.0% in 2024/25, expected to rise to 25.3% by 2026/27, still trailing behind the OECD countries' average of 34.1%.
Businesses are currently experiencing financial hardships caused by poor economic growth and unreliable electricity supply. Much to the taxpayers’ relief, the Minister has announced that no significant tax increases will be proposed.
The CIT rate is currently at 27%. No proposed changes to this rate.
CGT is triggered by a disposal or deemed disposal of an asset. The effective CGT rate remains at 21.6% for companies. No proposed changes.
VAT is levied at the standard rate of 15% on the supply of goods and services by registered vendors. No changes in the VAT rate were proposed.
Dividends tax is a final tax on dividends at a rate of 20%. No changes were proposed.
The carbon tax rate rose from R159 to R190 per tonne of carbon dioxide equivalent, taking effect from 1 January 2024. Additionally, the carbon fuel levy for 2023 will increase by 1c to 11c/l for petrol and 14c/l for diesel starting from 3 April 2024 in compliance with legislation.
South Africa will implement a global minimum corporate tax, multinational corporations with annual revenue exceeding €750 million will be subject to an effective tax rate of at least 15 per cent, regardless of where their profits are located. The introduction of global minimum tax rules is in line with the Organisation for Economic Co‐operation and Development’s base erosion and profit‐shifting framework.
The research and development incentive was due to end on 31 December 2023. There is now a proposal to extend this incentive to 31 December 2033.
