Page 30 - Profmark BSA Guide 2025

TAXATION IN SOUTH AFRICA

The SA Tax regime is set by the National Treasury and managed by the South African
Revenue Service (SARS). The National Budget Speech is delivered in parliament on
the last Wednesday in February each year, where announcements and proposals
are made affecting taxation in SA, and how funds are planned to be spent by the
Government.
Double Taxation Agreements
The tax liability of a foreign company depends on the nature of the income derived by
it, as well as the existence of a double taxation agreement. SA has agreements with
most of its trading partners to prevent double taxation of income accruing to South
African taxpayers from foreign sources, or of income accruing to foreign taxpayers from
South African sources. In terms of these arrangements a foreign resident will be taxed
in SA only if it conducts business through a permanent establishment in SA (there
are a few exceptions such as withholding taxes). Any person who is deemed to be a
resident of another state through the application of a double tax agreement will not be
treated as a South African resident.
Other Key Facts on Taxation in South Africa
Partnerships are not recognised as separate entities for income tax purposes.
Each individual partner is taxed separately on his share of the partnership profits.
There is no group taxation in SA – each company is taxed as a separate taxpayer. The
financial year end for individuals is end of February every year. Companies may select
their own financial year end. Companies who derive their income from mining, gold
mining, oil and gas, and farming may receive special dispensations.

Residence Based Tax
South Africans are taxed on their worldwide income, subject to certain exclusions.
Foreign taxes on that income are allowed as a credit against South African tax
payable. This is applicable to individuals, companies, CC’s, trusts and estates.

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