CENTRAL GOVERNMENT TAXES

CORPORATE INCOME TAX 

Corporations are taxed on a progressive system on income sourced in South Africa, excluding capital gains. The 1995 budget raised the marginal rate on income over Rs.80,000 from 43% to 45% 

PERSONAL INCOME TAX  

There is a system of individual deductions, corporate fringe benefits and capital allowances used to determine taxable income. 
 
 

There is a 14% value added tax (VAT) on all goods and services (certain foodstuffs excluded). 

RATES OF INCOME TAXATION 

Individuals : Individuals pay tax at progressive rates which reach a marginal rate of 45 per cent at R 100 000 of taxable income per annum. 

Companies : A flat rate of 35 per cent on taxable income derived from a source within South Africa.  The rate for companies also includes close corporations. 

Dividends : Tax on dividends is exempt in the hands of the recipient.  A secondary tax on companies (STC) of 12.5 per cent  is levied on companies on dividends distributed.  The implementation of the Katz Commission recommendations during the 1996 Budget means that retirement funds now bear a 17 per cent tax on interest income and net rentals. 

The Income Tax Act : The Act grants various special allowances to taxpayers as incentives to encourage particular economic activities and there are certain non-taxable financial incentive.  

Branches of Foreign Companies : STC will be abolished on dividends declared by foreign companies out of their South African sourced income, in respect of all such dividends declared from the commencement of years of assessment ending on or after 1 April 1996. 

In view of the removal of STC on foreign companies operating branches in the Republic it has been proposed that income tax be imposed at a rate of 40 per cent in respect of South African sourced income derived by such branches from the commencement of years of assessment ending on or after 1 April 1996. 

Value Added Tax (VAT) : Levied at 14 per cent on the supply of goods and services at all stages of the production and distribution chain.  It is also charged on the importation of certain goods and services.  Certain supplies are zero rated for VAT purpose (e.g. certain basic foodstuffs & export of goods) whilst certain supplies are exempt (e.g. residential rentals). 

All fee based financial services (with the exception of certain premiums on life policies and contributions to retirements funds as well as compulsory charges in respect of unit trust schemes) are subjected to VAT from October 1, 1996. 

LOCAL TAXES 

ESTATE DUTY

A 25 per cent tax is levied on the taxable value of the estate.  Only the first R 1000 000 is exempt from estate duties. 

TRANSFER DUTY

Payable by purchasers of fixed property. Companies pay a flat rate of 10 per cent.  Individuals pay 1 per cent on the first R 60,000, 5 per cent on R 60,001 to R 250,000 and 8 percent on the excess over R 250,000. 

REGIONAL SERVICES LEVY

THERE ARE TWO RSC LEVIES

A regional establishment levy based on turnover, the rate of which is usually from 0.10 to 0.15 % & a levy based on payroll of 0.25 to 0.35 percent. 

DONATIONS

A 25 per cent tax on the value of the donation, subject to a tax free R 25,000 grant per annum.  This tax is payable by the donor. 

MARKETABLE SECURITIES TAX AND STAMP DUTY

The rate of marketable securities tax and stamp duty on the registration of transfer of share certificates has been reduced from 1 per cent to 0.5 per cent with effect from April 1,1996.  Consideration will aslo be given to the imposition of marketable securities tax on transactions where a broker acts as a principal. 

PROPERTYB TAXES

Municipalities assess rates based on the rateable value of land and / or buildings. The levies are set by the municipalities and therefore vary across the country as is indicated below. In some cases a single levy is applied to the total valuation of the land and buildings. In other cases separate levies are applied to the land and/or building valuations. 

Rates are payable by the land owner who may recover a prokrata share from each tenant in a multi-tenanted building. The figures below are the rates in the Rand for 1995/96 and are applied to the valuation of the land and/or buildings: