January 18 2023

South Africa Enacts Reduced Corporate Income Tax Rate

Source: IBFD Tax Research Platform News

The government has enacted the effective date for the reduced corporate income tax rates, from 28% to 27%, through the Rates and Monetary Amounts and Amendment Revenue Laws Act 19 of 2022 published in the Government Gazette on 5 January 2023. For the years of assessment ending on 31 March 2023 and later the rate of corporate income tax payable is 27%. Further, the government has enacted various changes to rates and monetary thresholds for personal income tax tables, and an increase in excise duties on alcohol. The details of these changes are summarized below.

Personal income tax tables have been increased as follows:

  • a primary rebate, from ZAR 15,714 to ZAR 16,425;
  • a secondary rebate, from ZAR 8,613 to ZAR 9,000; and
  • a tertiary rebate from ZAR 2,871 to ZAR 2,997.

With effect from 23 February 2022, excise duty rates for tobacco and alcohol have been increased as follows:

  • per 1 litre bottle of beer or cider from ZAR 115.08 to ZAR 121.41;
  • per 1 litre bottle of fortified wine from ZAR 7.92 to ZAR 8.36;
  • per 1 litre bottle of sparkling wine from ZAR 15.51 to ZAR 16.52;
  • per 1 litre bottle of spirits, including whisky, gin or vodka from ZAR 230.18 to ZAR 245.15;
  • per packet of 20 cigarettes from ZAR 18.79 to ZAR19.82; and
  • per 25 grams of piped tobacco from ZAR 6.26 to ZAR 6.63.

The rate of carbon tax on greenhouse gas emissions has been increased from ZAR 134 to ZAR 144 per ton of carbon dioxide equivalent of the greenhouse gas emissions of a taxpayer. This amendment is deemed to have come into operation on 1 January 2022.

Medical scheme fees tax credits have been increased as follows:

  • from ZAR 332 to ZAR 347 if the person is not a member of a medical scheme or fund in respect of benefits to a dependant who is a member of a medical scheme or fund, or a dependant of a member of a medical scheme or fund;
  • from ZAR 664 to ZAR 694 in respect of benefits to the person and one dependant;
  • from ZAR 664 to ZAR 694 in respect of benefits to two dependants; and
  • from ZAR 224 to ZAR 234 in respect of benefits to each additional dependant.

These amendments were promulgated as the Rates and Monetary Amounts and Amendment of Revenue Laws Act, 19 of 2022 on 5 January 2023, in line with the announcement in the 2022/2023 Budget Review. The amendments, unless stated otherwise, are deemed to have come into effect on 1 March 2022.