February 2024 / Focus Africa

26 Febbraio 2024

2024 Budget: South Africa to Implement Global Minimum Corporate Tax

South Africa has proposed to implement global minimum tax rules with retroactive effect from 1 January 2024. This was announced by the Minister of Finance during his 2024 Budget Speech delivered on 21 February 2024. The government expects the implementation of this reform to yield an additional ZAR 8 billion in corporate tax revenue in 2026/27.

In line with this announcement, the National Treasury released the draft Global Minimum Tax Bill and the draft Global Minimum Tax Administration Bill for public comment. The draft Global Minimum Tax Bill is aimed at implementing the GloBE Model Rules in South Africa, imposing a top-up tax at a rate of 15% on the profits of in-scope multinational enterprise (MNE) groups (i.e. those with annual revenue exceeding EUR 750 million). The legislation proposes to introduce two measures to effect the change, namely an income inclusion rule (IIR) and a domestic minimum top-up tax (QDMTT). Meanwhile, the draft Global Minimum Tax Administration Bill focuses on the operational aspects and enforcement mechanisms of the proposed legislation.

The draft Global Minimum Tax Bill encompasses various provisions, most notable of which are the IIR which will enable the application of a top-up tax on profits reported by qualifying South African MNEs operating in other countries with effective tax rates under 15%, and the QDMTT which will enable SARS to collect a top-up tax for qualifying MNEs paying an effective tax rate of less than 15% in South Africa. Other provisions include but are not limited to:

  • charge to tax for constituent entities;
  • inapplicable articles of the GloBE Model Rules;
  • charge to tax for domestic constituent entities;
  • charge to tax for domestic joint ventures;
  • calculation of the QDMTT;
  • computation of adjusted covered taxes;
  • computation of top-up tax;
  • transitional rules; and
  • imposition of and liability for top-up tax.

On the administrative side, the draft Global Minimum Tax Administration Bill addresses the:

  • obligation to submit GloBE Information Return;
  • due date for submission of GloBE Information Return;
  • exception for returns provided under automatic exchange of information agreement;
  • due date for payment;
  • penalties and interest; and
  • recordkeeping and expiry of periods of limitations.
Source: IBFD Tax Research Platform News
29 Febbraio 2024

Africa in Review by the Numbers (February 2024)

US$6 billionPotential economic contribution of Nigeria’s palm biomass industry within the next four years following an MoU between the West African country and Malaysia. According to officials, the palm tree, with its 90% biomass and 10% palm oil composition, presents an unexplored resource in Nigeria as various parts are currently being discarded as waste yet could be utilised for activities such as electricity generation, furniture material production, organic fertiliser manufacturing, and medicinal applications. This agreement will aim to replicate Malaysia’s palm biomass industry in Nigeria.(Nairametrics)

11%Of Kenya’s electricity supplies are being imported from Ethiopia, exceeding supply from local thermal generators and solar facilities. In addition to Ethiopia, Uganda is the only other nation to export into Kenya's grid. (The East African)3Additional berths are set to be developed in Tanzania as it engaged Egyptian investors to help ramp up Dar es Salaam port. Tanzania has seen an increase in the number of ships docking at the port, largely resulting from increased mining activity.(The Citizen)

US$1 billionIn Chinese funds to refurbish a key railway line connecting Zambia’s copper belt region with the Tanzanian port of Dar es Salaam under its Belt and Road Initiative. This investment will be done through a Public-Private Partnership (PPP) and aims to strengthen cooperation between the three countries. (South China Morning Post)

21,000 acresOf government land in Kenya have been opened for commercial lease in a bid to boost food security.  This is part of a wider campaign targeting 50,000 acres of land and more than US$450 million in private investments.(Business Daily)9Early-stage African climate tech startups to receive US$1.8 million and acceleration support from Catalyst Fund’s second round of investment. Winners hail from Tanzania, Kenya, South Africa, Egypt, Nigeria and Senegal.(Get Funded Africa)

US$150 millionGreen bond launched by the IFC and Social Investment Managers and Advisors LLC (SIMA) to finance solar projects in Africa. The bond will offer short-term corporate financing and project financing of up to 10 years to support the growth of small and medium-sized local developers with a focus on manufacturing, services, education, healthcare, and agri-processing.(IFC)

1 millionNigerian SMEs to benefit from an accelerator programme sponsored by Proparco and the African Development Bank, deployed through First City Monument Bank (FMCB). This programme will particularly support female-led initiatives which remain disproportionately underfunded across the continent.(Punch)14,000 megawattsHydropower capacity to be added by 2040 as Mozambique aims to position itself as Africa's biggest hydropower producer and launch a green hydrogen industry. Alongside DRC and Ethiopia, Mozambique possesses among the continent's richest reserves of hydropower, wind, solar and natural gas resources.(Business Insider Africa)

US$6 billionIn funding made available by Italy in a bid to strengthen its partnership with the region. The funding plan was unveiled at the Italy-Africa Summit to bolster economic links and create an energy hub for Europe.(African Development Bank)100,000 barrelsof daily capacity projected for Ghana's first-ever private-owned oil refinery. The US$2 billion Chinese-owned refinery has an initial capacity of 40,000 barrels and is expected to be completed this year.(GhanaWeb)

100%Transition towards clean energy in Kenya following an endorsement of US$70 million by the Trust Fund Committee of the Climate Investment Funds (CIF) in order to advance the integration and utilisation of renewable energy in the Kenyan grid. Currently, the share of renewable energy in Kenya is almost 90 per cent – including 45 per cent geothermal and 26 per cent hydropower.(Africa Business Community)