South Africa: Budget 2022; reduction in corporate income tax rate and broadening the tax base

2022 budget speech announced that the corporate income tax rate would be reduced

2022 budget speech announced that the corporate income tax rate would be reduced

The 2022 budget speech, delivered 23 February 2022, announced that the corporate income tax rate would be reduced to 27% (from 28%).

The reduction in the corporate income tax rate would be paid for with the introduction of measures to broaden the tax base.

The effective dates of the changes are proposed for years of assessment ending on or after 31 March 2023.

Background

In the 2021 budget speech, it was announced that the rate of the corporate income tax would be reduced to 27% (from 28%), but the rate reduction was not included in the “Draft Rates and Monetary Amounts and Amendment of Revenue Laws Bill (the Draft Rates and Monetary Amounts Bill) for 2021.”

The 2021 legislative cycle did, however, see the promulgation of amendments to section 20 of the Income Tax Act No 58 of 1962 (the Income Tax Act) that introduced a limitation on the ability of a company to use assessed tax losses. 

Budget proposals

On 23 February 2022, the Minister of Finance announced that the corporate income tax rate would be reduced to 27%, effective from years of assessment ending on or after 31 March 2023.

This change has been included the “Draft Rates and Monetary Amounts Bill for 2022” which also includes amendments changing the effective dates of other amendments including changes to section 20.  These amendments are proposed to be effective 31 March 2023 and will apply in respect of years of assessment ending on or after that date.

Read a February 2022 report [PDF 215 KB] prepared by the KPMG member firm in South Africa

 

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