CFCs' (Controlled Foreign Companies) high tax rate exemption will be lowered !
20 February 2019
If a foreign company is subject to tax in a “high tax” jurisdiction” the income of the foreign company should not be taxed in SA. South African Corporates that own foreign companies may look forward to (at least) some or potentially all their CFC income not being taxed in South Africa.
Currently (and broadly speaking) a foreign company is required to pay at least 21% (75% of South Africa’s Corporate Income Tax (CIT) rate of 28%). If the foreign tax rate equals or exceeds 21% there is a strong possibility that the exemption will apply. Global CIT rates have been decreasing, with the result that the exclusion no longer applies to some countries such as the UK. The Minister’s announcement that the 21% will be reduced is welcomed as more countries will fall into the high tax rate exemption.
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