Effective for tax years ending on or after March 2023, Corporate Income Tax will be reduced by a percentage point in a move aimed at encouraging investment and curbing avoidance.
This is part of a basket of tax proposals that National Treasury has tabled in Parliament as part of its 2022 Budget on Wednesday.
“As discussed in the 2020 Budget Review, government is restructuring the corporate income tax system in a manner that has no effect on net revenue collections. Effective for tax years ending on or after 31 March 2023, the corporate income tax rate is reduced by one percentage point to 27%.
“Changes to corporate income tax have the largest impact on investor behaviour – influencing jobs, wages and prices – and can support economic growth.”
Treasury said government’s role is to find a balance between a reasonable tax burden that minimises the negative effect on investment and reduces incentives for base erosion and profit shifting, while ensuring that companies and their stakeholders contribute fairly to tax revenues.
“South Africa’s corporate income tax rate exceeds the Organisation for Economic Co‐operation and Development average of 23%.
“Many countries have reduced their rates over the past 15 years. In contrast, South Africa’s statutory rate has remained at 28%. Given that many countries with strong investment and trading ties to South Africa have significantly lower rates, this provides a strong incentive for tax avoidance.” – SAnews.gov.za
