SOUTH AFRICA Law and Practice Contributed by: Magda Snyckers and Cameron Nathaniel, ENS
9.11 Country-by-Country Reporting and Transparency Provisions No response has been provided in this jurisdiction. 9.12 Digital Economy Businesses South Africa has not yet taken any specific measures to tax the digital economy. 9.13 Approach to Digital Services Taxation See 9.12 Digital Economy Businesses . 9.14 Offshore IP Provisions South Africa levies a withholding tax on non-residents in respect of amounts received or accrued in relation to intellectual property (IP) from a South African source. A payment made by a South African resident would be regarded as being from a South African source irrespective of where the IP has been developed. In addition, if South African companies are paying a royalty in respect of the use of the IP of a non-resident party, their tax deductions may be limited. This applies to licences for so-called “tainted IP”. In this regard, the Act contains anti-avoidance provisions which tar - get IP sale-and-leaseback arrangements where cer - tain parties are located outside the tax net. IP will be considered “tainted” where South African-developed IP is sold to a non-resident or tax-exempt entity and is then licensed back to the South African creator or other South African end users, who pay licence fees that are claimed as tax deductions.
entities are still subject to the corporate tax rate of 27%. 9.6 Hybrid Instruments and BEPS Implementation Hybrid instruments are adequately regulated under Sections 8E and 8F of the Act. 9.7 Interest Deductibility and Territorial Tax Regime See 2.5 Deduction of Interest . 9.8 Controlled Foreign Corporation Reform South Africa taxes on a worldwide basis and has a well-developed, sophisticated and comprehensive CFC regime. 9.9 Anti-Avoidance Rules The principal purpose test in the MLI and South Africa’s GAAR provisions require commercial consid - erations other than tax benefits as the sole or main purposes for a transaction that has South African tax implications and would impact on inbound or out - bound investments. 9.10 Transfer Pricing and IP Taxation South Africa’s transfer pricing rules have always fol - lowed the OECD rules.
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