The global corporate tax survey for 2004 recently undertaken by accounting firm KPMG has shown that South Africa’s maximum effective corporate tax rate is now way above the global average, and is in fact one of the highest in the world.
Whilst the headline corporate tax rate in South Africa is levied at 30%, an additional 12.5% secondary tax is placed on any net dividends that a company declares, meaning that if a firm distributes 100% of its earnings as a dividend, the effective corporate tax rate is 37.78%.
Another factor observed by analysts for the growing differential is that the corporate tax rates in South Africa have remained on hold for a number of years, whilst the global average has been trending downwards, and now stands at 29.07%.
The survey revealed that the both the OECD average and EU average corporate tax rates have also continued to fall, standing at 29.96% and 31.32% respectively.
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