Tax

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• Tax

  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 mid February each year. The tables below cover changes made in February 2009.

  Taxable income (R)	Rate of Tax (R)
  0 – 132 000	18% of each R1
  132 001 – 210 000	23 760 + 25% of the amount above 132 000
  210 001 – 290 000	43 260 + 30% of the amount above 210 000
  290 001 – 410 000	67 260 + 35% of the amount above 290 000
  410 001 – 525 000	109 260 + 38% of the amount above 410 000
  525 001 and above	152 960 + 40% of the amount above 525 000

  Rebates (Individuals only)

  Primary	R9 756
  Additional (persons 65 and older)	R5 400

  Tax Thresholds

  Below age 65	R54 200
  Age 65 and over	R84 200

  Trusts other than Special Trusts:

  Rate of Tax – 40%

  Retirement fund lump sum withdrawal benefits

  Taxable income (R)	Rate of Tax (R)
  0 – 300 000	18% of each R1
  300 001 – 600 000	54 000 + 27% of the amount above 300 000
  600 001 and above	135 000 + 36% of the amount above 600 000

  Retirement fund lump sum benefits

  Taxable income (R)	Rate of Tax (R)
  0 – 300 000	18% of each R1
  300 001 – 600 000	54 000 + 27% of the amount above 300 000
  600 001 and above	135 000 + 36% of the amount above 600 000

  INCOME TAX: COMPANIES

  Type	Rate of Tax
  Companies	28%
  Personal service provider companies	33%
  Foreign resident companies which earn income from a source in South Africa	33%

  INCOME TAX: SMALL BUSINESS CORPORATIONS

  Taxable income (R)	Rate of Tax (R)
  0 – 54 200	0%
  54 201 – 300 000	10% of the amount above 54 200
  300 001 and above	24 580 + 28% of the amount above 300 000

  SECONDARY TAX ON COMPANIES (STC)

  STC is imposed at a rate of 10% on dividends declared by resident companies after being reduced by dividends receivable during a dividend cycle. South African branches of foreign resident companies are exempt from STC.

  TURNOVER TAX FOR MICRO BUSINESSES

  Taxable income (R)	Rate of Tax (R)
  0 – 100 000	0%
  100 001 – 300 000	1% of the amount above 100 000
  300 001 – 500 000	2 000 + 3% of the amount above 300 000
  500 001 – 750 000	8 000 + 5% of the amount above 500 000
  750 001 and above	20 500 + 7% of the amount above 750 000

  RESIDENCE BASIS OF TAXATION

  Residents are taxed on their worldwide income, subject to certain exclusions. Foreign taxes on that income are allowed as a credit against South African tax payable. This is applicable to individuals, companies, close corporations and trusts.

  TAXATION OF CAPITAL GAINS

  Capital gains on the disposal of assets are included in taxable income.

  MAXIMUM EFFECTIVE RATE OF TAX

  Individuals	10%
  Companies	14%
  Trusts	20%

  OTHER TAXES, DUTIES AND LEVIES

  Transfer duty

  Value of property (R)	Rate
  0 – 500 000	0%
  500 001 – 1 000 000	5% of the value above R500 000
  1 000 001 above	R25 000 + 8% of the value exceeding R1 000 000

• Value-Added Tax (VAT)

  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.

• Goods and services except from VAT

  The following goods and services are subject to VAT at the zero-rate:

  Goods

  • Goods exported from South Africa where the vendor is liable for the transport of the goods to the foreign country;
  • Brown bread;
  • Brown wheaten meal;
  • Maize meal;
  • Samp;
  • Mealie rice;
  • Dried mealies;
  • Dried beans;
  • Rice;
  • Lentils;
  • Fruit and vegetables;
  • Pilchards and sardinella in tins or cans;
  • Milk, cultured milk and milk powder;
  • Cooking oil;
  • Eggs;
  • Edible legumes and pulse of leguminous plants;
  • Dairy powder blends;
  • Petrol, diesel and illuminating paraffin;
  • Certain agricultural goods supplied to qualifying VAT registered farmers;
  • Certain gold coins issued by the S A Reserve Bank, including Kruger Rands.

  Goods exported from South Africa where the vendor is liable for the transport of the goods to the foreign country.

  Services (including but not limited to):

  • International transport and related services;
  • Payments by public / local authorities to welfare organisations;
  • Services supplied outside South Africa.

  Zero-rating implies that VAT at 0% is levied on supplies made by the vendor. VAT incurred on goods or services acquired by the vendor for purposes of making those supplies is claimable as input tax.
  The following goods and services are exempt from VAT:

  • Financial services;
  • Passenger transport by road and rail;
  • The rental of residential accommodation;
  • Educational services in primary and secondary schools, universities and technikons;
  • Interest, and life insurance benefits;
  • Pension and similar institutions and medical schemes;
  • Medical services and medicines supplied by State and provincial hospitals and local authority clinics;
  • The supply of any goods or services by an employee organisation to its members to the extent that the consideration consists of membership contributions;
  • Child minding services in crèches and after-school centres.

  An exemption implies that the supplier of goods does not levy VAT on those exempt supplies but must bear VAT on purchases incurred in making such supplies.

  • Tourists, diplomats and exports to foreign countries;
  • Tourists.

  VAT borne by foreign tourists may be refunded by the VAT Refund Administrator (VRA) upon departure from South Africa. The tourist must be in possession of a valid tax invoice and have the goods available for inspection upon departure from South 34 Taxation in South Africa Africa. An administration fee of 1,5% of the VAT inclusive amount of the claim, subject to a minimum of R10 and a maximumof R250, is levied by the VRA for processing the refund.