Facts for Corporate Income Tax are given below.
Between 1 April 2019 and 31 March 2020 the tax rate applicable for corporate income of both resident and non-resident companies for tax years ending is 28%.
Small business corporations (i.e. companies with only natural persons as members/owners and with gross income of not more than 20 million South African rand [ZAR]) are taxed at the following rates:
- 0% on the first ZAR 79,000 of taxable income
- 7% on taxable income above ZAR 79,000 but not exceeding ZAR365,000
- 21% on taxable income above ZAR 365,000 but not exceeding ZAR550,000
- 28% on taxable income exceeding ZAR 550,000
Special rates apply in certain industries, such as mining and long-term insurance.
Special rates of normal tax, based on a standard formula, are prescribed for companies mining for gold. Companies mining for other minerals are subject to the same 28% rate of normal tax that applies to ordinary companies.
Long-term insurance companies
Life insurance companies are required to follow the ‘five-funds approach’, with policies divided into five funds, depending on the nature of the beneficiary. Each fund is then allocated assets according to the risk carried by the fund.
Each of the five funds is treated as a separate taxpayer and taxed at the rate applicable to that type of fund.
These rates are 30% for individual policyholder funds, 0% for untaxed policyholder funds, and 28% for company policyholder funds, risk policy funds, and corporate funds (a corporate fund being the company itself).
This article is provided for information only and does not constitute the provision of professional advice of any kind.