6th Jul, 2020
Income Tax
Income tax is the government's main source of income and is levied in terms of the Income Tax Act, 1962 [the Act].
Income tax is levied on residents' worldwide income, with appropriate relief to avoid double taxation. Non-residents are taxed on their income from a South African source (such as rental income from fixed property situated in South Africa). Tax is levied on taxable income that, in essence, consists of gross income less qualifying exemptions and allowable deductions as per the Act.
Small business corporations benefit from a graduated tax rate on their taxable income.
Small business corporations can also write off certain investment expenditure in the year in which it is incurred.
Capital Gains Tax
Capital Gains Tax (CGT) was introduced in October 2001. It forms part of the income tax system and includes in taxable income, capital gains made on the disposal of certain assets.
Value-Added Tax (VAT)
Value-added tax (VAT) increased from 14% to 15% from 1 April 2018 and it is levied on all goods and services subject to certain exemptions, exceptions, deductions and adjustments provided for in the Value-Added Tax Act, 1991.
VAT is levied on the supply of all goods and services rendered by vendors throughout the business cycle. It is the government's second biggest source of income.
VAT is also levied on the importation of certain goods and services into South Africa. It is levied at the standard rate of 15%, but provision for exemptions of certain goods or services exists.
Customs Duty
Ordinary Customs Duty is levied on imported goods classifiable in Schedule No. 1 Part 1of the Customs and Excise Act, 1964. South Africa is a member of the World Customs Organisation (WCO) and therefore, uses the Harmonized Commodity Description and Coding System (HS) for the classification of goods on importation.
Goods can be imported free of duty where the rate of duty is indicated ‘Free’. Other types of rates include –
- specific rates (e.g. cents per kilogram or cents per litre)
- ad valorem rates (%)
- compound rates (e.g. 30% or 500 cents per unit)
Excise Duty
Excise duty is levied on certain locally manufactured goods as well as on their imported equivalents in terms of Schedule No.1 Part 2 of the Customs and Excise Act, 1964. This duty is levied as a specific rate of duty (e.g. c/kg or c/ℓAA) on tobacco and liquor, and as an Ad Valorem rate of duty on products such as cosmetics, televisions, audio equipment and motor vehicles.
Environmental Levy (Schedule No. 1 Part 3)
Environmental levy is levied on certain locally manufactured goods as well as on some of their imported equivalents in terms of Schedule No. 1 Part 3 of the Customs and Excise Act, 1964. The levy aims to influence the public’s behaviour towards the environment. Environmental levy is imposed on goods such as plastic bags, electricity generation, electric filament lamps, carbon dioxide emissions from motor vehicles and tyres. This duty is levied as a specific rate of duty (e,g c/bag, c/kW.h). It is payable in addition to any customs or excise duty payable in terms of Part 1 or Part 2 of Schedule No.1.
Fuel and Road Accident Levy
Fuel and Road accident levy are imposed on fuel products manufactured in or imported into the Republic in terms of Schedule No. 1 Part 5 of the Customs and Excise Act, 1964. Road accident fund levy is collected on behalf of the Road Accident Fund. These duties are levied as a specific rate of duty (e.g. c/li). It is payable in addition to any customs or excise duty payable in terms of Part 1 or Part 2 of Schedule No. 1.
Trade Remedies (Schedule No. 2)
Trade remedy duties are levied on certain imported goods in terms of Schedule No. 2 of the Customs and Excise Act, 1964. The duties are in place as a remedy to protect certain local industries. Anti-dumping duties are imposed in the case of dumping, countervailing duties in the case of subsidised exports and safeguard duties or quota in the case of disruptive competition. The duties are payable in addition to any customs duties payable in Schedule No. 1. The duties are levied as specific rate of duty or ad valorem duties (e.g c/kg or %). These duties are payable in addition to any customs or excise duty payable in terms of Part 1 or Part 2 of Schedule No. 1.
International Oil Pollution Compensation fund (Merchant Shipping Contribution Act
The levy is payable by a person who has during a tax period, received contributing oil in ports or terminal installations of the Republic, where such oil which has been carried by sea to such ports or terminal installation. This levy is collected for the International Oil Pollution Compensation fund.
Transfer Duty
Transfer Duty is payable when property is acquired at progressive marginal rates. All transactions relating to a taxable supply of goods that are subject to VAT are exempt from transfer duty.
Estate Duty
For the purposes of Estate Duty, an estate consists of all property of the deceased - including deemed property, such as life insurance policies - wherever situated. However, the estate of a deceased non-resident consists only of his or her South African assets. The duty, at a rate of 20%, is calculated on the dutiable amount of the estate. Certain admissible deductions are allowed against the total value of the estate.
Stamp Duty
The Stamp Duties Act, 1968, has been repealed with effect from 1 April 2009. No stamp duty is liable on leases of fixed property executed on or after that date. If a lease agreement was executed before 1 April 2009, stamp duty is still levied on leases of fixed property.
Securities Transfer Tax
The Uncertificated Securities Tax Act, 1998 was replaced by the Securities Transfer Tax Act, 2007, and provisions are applicable in respect of every transfer of any security on or after 1 July 2008. Securities Transfer Tax is levied at a rate of 0.25%.
Skills Development Levy (SDL)
SARS collects the Skills Development Levy on behalf of the Department of Higher Education and Training. This levy is compulsory in terms of the Skills Development Levies Act, 1998, for the purpose of funding education and training. The rate is 1% of a payroll and is payable by certain employers who are registered with SARS for employees’ tax purposes and who have an annual payroll in excess of R500 000.
Unemployment Insurance Fund (UIF)
The Unemployment Insurance Fund (UIF) provides short-term relief to workers when they become unemployed or are unable to work because of, for example, maternity or adoption leave, or illness. It also provides relief to the dependants of the deceased contributor in terms of the Unemployment Insurance Contributions Act, 2002.
The bulk of contributions to UIF are collected by SARS and transferred to the fund, which is administered by the Unemployment Insurance commissioner.
Air Passenger Tax (APT)
The APT rates for passengers departing on international flights are currently R190 and for passengers flying to Botswana, Lesotho, Namibia and Swaziland a lower rate is charged.
Donations Tax
Donations Tax is tax payable on the total value of property disposed of by a South African resident by means of a donation.
Dividends Tax
Dividends Tax is a tax on shareholders (beneficial owners) when dividends are paid to them, and, under normal circumstances, is withheld from their dividend payment by a withholding agent (either the company paying the dividend or, where a regulated intermediary is involved, by the latter).
Mineral and Petroleum Resource Royalty
The royalty is triggered on the transfer of a mineral royalty extracted from within the Republic. As is the case for all other taxes, duties, levies, fees or money collected by SARS, the royalty collected is paid to the National Revenue Fund.
Other taxes
Other taxes include provincial gaming taxes. Local governments also finance the cost of municipal services by levying rates on the value of fixed property.