Emerging Markets Rates and Currencies Handbook

Tax Summary – South Africa South Africa reduced to 0-15% 10% / 15%. May be reduced under certain tax treaties • Generally: exempt for beneficial owner with min. holding of 10% of equity or voting rights; 10% / 15%- all other cases • General domestic Dividend WHT 20% Deductibility of interests • Generally deductible* • Budget plan (from 1 Jan 2022 earliest): net interest expense deductions to be restricted to 30% of earnings (i.e. tax EBITDA). • Thin cap rules covered as part of Transfer Pricing Legislation • Arms length pricing is a key guiding principle • Generally deductible* • Budget plan (from 1 Jan 2022 earliest) : net interest expense deductions to be restricted to 30% of earnings (i.e. tax EBITDA). • Thin cap is treated as potential breach of general arm's- length standard • Transfer Pricing rules apply • Generally, interest is deductible • N/A • N/A Deductibility of (FX) Losses • If non-current asset/ liability, must be deferred until realized • Deductible to the extent that income attributable to that transaction is included in the net income of the South African person owning the Controlled Foreign Entity • Must be analysed on a case by case basis • Defer until realized – portion might be at CGT rate as well. Para 43 of 8h Schedule in Income Tax Act Other Taxes/Duties • Interest charged is exempt from VAT of 15% • Where interest is not subject to income tax or WHT, interest deductions are limited to a percentage of taxable income • Interest charged is exempt from VAT of 15% • N/A • Dividends taxed at 20% on paid by all resident and non-resident companies as on shares listed on a South African exchange (JSE). • Dividends are tax exempt if the beneficial owner Country Deductibility and Considerations Inter-Co Debt Offshore Bank Loans Offshore Local Borrowing Derivatives Equities