Reduced tax rate for branches
Ide Louw South African companies are currently taxed at a rate of 28% on their business income, whereas the South African branch of a foreign company is taxed at a rate of 33% on its South African sourced income. The reason for the mismatch in corporate tax rates is apparent. South African resident companies are subject to a 10% STC on the net amount of a dividend declared whilst branches are not subject to a branch profit repatriation tax.
As expected, the 33% tax rate for non-resident companies is dropped to 28% (aligned with South African companies). What is not mentioned at this point is if a branch profit repatriation tax will be considered.
