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Tax


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Tables below give a guideline and summary of each tax or tax system in South Africa. For more information on Taxation in South Africa visit: www.sars.gov.za/ . South African Tax is determined by the Minister of Finance when he delivers his budget speech in February each year, when the tax year ends. The tables below reflect tax rates applicable for the tax year ending in February 2015.

TAX RATES: COMPANIES

SA Income - Foreign Company/Branch Tax

For years of assessment ending during the following periods:

1 April 1996 - 31 March 1999 40%

1 April 1999 - 31 March 2005 35%

1 April 2005 - 31 March 2008 34%

1 April 2008 - 31 March 2012 33%

1 April 2012 - 31 March 2015 28%

Secondary Tax on Companies

Dividend declared between 17 March 1993 and 21 June 1994 15%

Dividend declared between 22 June 1994 and 13 March 1996 25%

Dividend declared between 14 March 1996 and 30 September 2007 12,5%

Dividend declared between 1 October 2007 and 31 March 2012 10%

Dividends Tax

Dividend declared from 1 April 2012 15%

TURNOVER TAX: MICRO BUSINESSES

As from 1 March 2009, a simplified turnover-based tax system was introduced for small sole proprietors, partnerships and incorporated businesses with a turnover of less than R1 million per year.

This system is elective. With effect from years of assessment commencing 1 March 2012, a micro business can voluntarily exit the system at the end of any year of assessment. However, once out of the system the taxpayer will not be permitted to re-enter.

Prior to this, a three year lock-in period existed for exit and re-entry into the system. Personal services rendered under employment-like conditions and certain professional services are excluded from this system to which the following tax rates apply:

Turnover

Rates of tax

R 0 - R 150 000

Nil

R150 001 - R 300 000

1% of the amount over R 150 000

R300 001 - R 500 000

R 1 500 + 2% of the amount over R 300 000

R500 001 - R 750 000

R 5 500 + 4% of the amount over R 500 000

R750 001 - R1 000 000

R 15 500 + 6% of the amount over R 750 000

SMALL BUSINESS CORPORATIONS

Turnover

Rates of tax

R 0 - R 70 700

Nil

R 70 701 - R365 000

7% of the amount over R 70 700

R365 001 - R550 000

R20 601 + 21% of the amount over R365 000

R550 001 + R59 451 +

28% of the amount over R550 000

Rates of tax
Value-added tax (VAT) is levied on the supply of goods and services by registered vendors throughout the business cycle. Effectively, the tax is levied on the value-added by an enterprise. VAT is also levied on the importation of goods as well as on the supply of imported services into the Republic. VAT is levied at the standard rate of 14%, but certain supplies are subject to the zero-rate or are exempt from VAT. VAT is levied on an inclusive basis, which means that VAT has to be included in all prices on products, price lists, advertisements and quotations 

Who is liable for the payment of VAT?
VAT is levied on all supplies made by registered vendors in the course or furtherance of their enterprises. Only a vendor may levy VAT. A vendor making exempt supplies may, therefore, not charge VAT and may not claim back any VAT borne by the enterprise. A vendor making taxable supplies of more than R300 000 per annum must register for VAT. A vendor making taxable supplies of less than R300 000 per annum, but more than R20 000 per annum is not obliged to register as a VAT vendor, but may nevertheless apply for voluntary registration.

Enterprises making taxable supplies of less than R20 000 per annum cannot register for VAT but excludes the following:

Any person who intends to carry on an enterprise from a specified date, where the enterprise will be supplied to that person as a going concern and the total value of taxable supplies made by the supplier of the going concern has exceeded R20 000 in the previous 12 months;

Any person who carries on an enterprise of a welfare organisation, share block company or a local authority supplying specific goods or services as listed in the VAT Act;

or Any person who carries on an enterprise where as a result of the nature of the activity, the person can reasonably be expected to make taxable supplies exceeding R20 000 in a 12-month period. The taxable supplies will therefore only be made after a period of time.

It must be borne in mind that it may be advantageous for a person to register if they supply goods or services mainly to other vendors so as to allow the purchasing vendor to claim the VAT incurred on the supply, (i.e. input tax). Where the person supplies mainly services to non-vendors, (i.e. people who are not registered for VAT), it will generally not be advantageous to voluntarily register for VAT. In addition, where a person makes exempt supplies, the person will not be conducting an enterprise for VAT purposes and will therefore not be able to register.

When a registered vendor is supplied with goods or services by another registered vendor, VAT is levied by the supplier of those goods or services. The vendor acquiring the goods subtracts the input tax (VAT borne by the vendor) from the output tax (VAT charged by the supplying vendor). The difference is VAT payable to/refundable by SARS. The effect is that VAT is borne by the final consumer of goods and services.

Items subject to the standard rate
The standard rate of 14% applies to the supply of most goods and services supplied by vendors. The importation of most goods and imported services (i.e. services acquired for the purposes other than making taxable supplies) are also subject to VAT at the standard rate.

Supplies of (inter alia) the following goods or services are zero-rated, provided that all documentary and procedural requirements have been met:
  • Exportation of goods;
  • Supply of an enterprise as a going concern;
  • Unmanufactured gold supplied to the South African Reserve Bank, the South African Mint Company or a  registered bank;
  • Certain gold coins;
  • Certain agricultural products supplied under prescribed circumstances;
  • Fuel levy goods and petroleum oil;
  • Goods transferred to a foreign branch;
  • Basic foodstuffs such as brown bread, brown wheaten meal, maize meal, samp, mealie rice, dried maize, beans and lentils, pilchards or sardinella, rice, vegetables, fruit, vegetable oil, milk, cultured milk, milk powder, dairy powder blend, eggs and edible legumes;
  • Illuminating paraffin (kerosene) used for illuminating or heating;
  • Movable goods (excluding a motor car) sold to a registered vendor in a customs controlled area (CCA) (in an industrial development zone), if the goods are physically delivered to the recipient by the supplier or his VAT-registered cartage contractor;
  • Goods supplied by a vendor to a person who is a non-resident and non-vendor, but delivered to a vendor-recipient who will use the goods wholly for taxable supplies;
  • International transport of passengers or goods – outside, to or from South Africa;
  • Local leg of international carriage by aircraft;
  • Local leg of international transport of goods;
  • Services relating to land and improvements outside South Africa;
  • Certain services relating to goods outside South Africa, foreign going ships or aircrafts, goods temporarily admitted, goods exported or a foreign-operated railway train;
  • Services rendered elsewhere than in South Africa or to a registered vendor in a CCA;
  • Services supplied to a non-resident, if not directly in connection with movable or immovable property in South Africa (with certain exceptions);
  • The granting of, and other services relating to, intellectual property rights to the extent that the rights will be used outside South Africa;
  • Services rendered by welfare organisations, to the extent that the services are funded by national or local government;
  • Certain services funded by government grants;
  • Services funded by international donor funds (e.g. TIKZN services);
  • Vocational training of employees of non-resident employers;
  • Housing subsidies;
  • Certain warranty services;
  • Municipal property rates;
  • Race-horse winnings;
  • Supply of goods by an inbound duty- and tax-free shop; and
  • Supply of goods in a licensed customs and excise storage warehouse, if the goods have not been entered for home consumption (if approval has been obtained to zero-rate instead of exempt the supply).
Supplies of (inter alia) the following goods and services are exempt from VAT:
  • Certain financial services;
  • Donated goods or services supplied by an association not for gain;
  • Residential accommodation in a dwelling;
  • Leasehold land that is or will be used to erect a dwelling;
  • Land (including existing improvements) situated outside South Africa;
  • Management services supplied by bodies corporate of sectional title property schemes, share block companies, housing development schemes for retired persons, and home owners’ associations;
  • Passenger transport by road or railway;
  • Educational services;
  • Crèche and after-school services;
  • Services supplied by employee organisations against payment of membership contributions;
  • Goods supplied in South Africa by a person who is not a resident of South Africa, and is not a vendor, if the goods have not been entered for home consumption (unless approval is obtained to zero-rate the supply);
  • Goods or services by a bargaining council against payment of membership contributions; and
  • Goods or services by a political party against payment of membership contributions.