South Africa: Tax Flash – Budget Edition 2025

In 2024 South Africa was the largest economy in Africa with a GDP of over USD 400 billion. It furthermore has the most diversified and industrialized economy in Africa.

Recent tax developments on the continent.

The ratification of the SA/Kuwait protocol represents a pivotal development in the tax relationship between the two countries. The changes introduced by the protocol, particularly those related to dividends, have far-reaching implications for Kuwaiti, Dutch and Swedish investors in SA companies.

The Tax Flash – Budget Edition from WTS Renmere provides an overview of tax and exchange control proposals announced in the 2025 Budget Speech of the National Treasury (RSA).

Recent tax developments from nine countries on the continent.

The South African Revenue Service will soon replace PN31 with section 11G of the ITA, governing deductions for expenses incurred in producing interest income. This will apply to years of assessment starting after 1 January 2025.

Recent tax developments from nine countries on the continent.

In 2024, South Africa proposed amendments to Section 7C of the Income Tax Act to curb tax avoidance through interest-free or low-interest loans to trusts, targeting cross-border transactions and clarifying the interaction with transfer pricing provisions, starting January 2025.

Recent tax developments from eight countries on the continent.

One of the key issues that foreign investors in South Africa (ZA) need to consider is whether their activities in South Africa will create a Permanent Establishment (PE) and expose them to a corporate income tax liability in South Africa.

Interest expenditure incurred by a South African resident taxpayer may only be deducted in terms of section 24J(2) of the Income Tax Act, No. 58 of 1962 (‘ITA’)

Recent tax developments from eight countries on the continent.

South Africa applies a residence basis of taxation, subjecting South African tax residents to tax on worldwide income and capital gains, while non-resident taxpayers are subject to income tax on South African source income or income that is deemed to be from a South African source.

The term ‘beneficial ownership’ (‘BO’) has a somewhat elusive meaning.

In terms of section 9D of the Income Tax Act 58 of 1962, income tax is imposed on South African shareholders of ‘controlled foreign companies’ on the income earned by the CFC in certain circumstances.

South Africa (‘SA’) has a long-standing history of being an attractive market for foreign investors and serving as a gateway for investing into the rest of Africa.

The proposed amendment will limit the potential of legislative circumvention of transfer pricing rules