South African GloBE Minimum Tax Compliance

Overview of South African GloBE compliance regime

South Africa's Global Minimum Tax (GMT) regime applies to large multi-national entity (MNE) groups with global consolidated revenues exceeding €750 million (in at least two of the four preceding fiscal years).

The regime's core compliance elements are:

• Determination of in-scope status based on group consolidated revenue and presence of constituent entities (i.e. any legal entity or permanent establishment that is part of a MNE Group subject to Pillar Two rules) in various jurisdictions.
• Calculation of an Effective Tax Rate (ETR) on a jurisdictional basis and determining the "top-up tax" liability where the ETR is below 15%.
• GloBE Information Returns (GIRs) and/or notifications to SARS under local administrative rules.

South Africa's regime includes an Income Inclusion Rule (IIR) and a Domestic Minimum Top-Up Tax (DMTT) and specifically excludes the application of the Undertaxed Payments Rule (UTPR) under local law.

When the South African company is the Ultimate Parent Entity (UPE) of the global MNE

If a South African entity is the Ultimate Parent Entity (UPE) (i.e. the top-level controlling company of the MNE group and not controlled by any other group entity) the following elements should be considered:

Key compliance requirements

01 Group scope determination

• Confirm the group is in scope (consolidated turnover > €750m and present in multiple jurisdictions).
• The South African UPE must identify all constituent entities, including foreign subsidiaries.

02 Income inclusion rule

• The South African UPE is responsible for calculating and paying any top-up tax under the IIR for low-taxed foreign constituent entities.
• Top-up tax brings low-tax jurisdictions up to an effective rate of 15%.

03 GloBE Information Return (GIR)

• The UPE (or a designated filing entity) must file a GIR for the group, covering all jurisdictions in which the group operates, unless another jurisdiction files under a qualified competent authority agreement.
• First GIR due 18 months after the first reportable fiscal year end (e.g., for a calendar year, by 30 June 2026) and 15 months for subsequent years.

04 Registration and Notification

• The South African UPE and each designated related local entity (DCE) must register with SARS and submit notifications regarding which entity will file the GIR (e.g. UPE, designated filing entity, or designated local entity) by prescribed deadlines.

05 Effective Tax Rate calculation

Compute ETR at a jurisdiction level in accordance with the GloBE rules. Where the ETR is below 15%, top-up tax applies.

06 Payment of Top-Up Tax

If South Africa's DMTT rules apply because local profits are taxed below 15%, South African constituent entities (including the South African UPE) may be jointly and severally liable.

When the South African company is a subsidiary / Constituent Entity of a foreign UPE

If the South African company is not the UPE, but rather a constituent entity of an MNE group whose UPE is located in another jurisdiction:

Key compliance requirements

01 In-scope determination

• The South African subsidiary forms part of the global MNE group's scope if the group meets the revenue threshold and multi-jurisdiction criteria.
• It is classified as a DCE for South African administrative purposes.

02 Registration and Notification

• As a DCE, the South African company must register with SARS and notify SARS of the identity of the reporting entity (e.g. designated filing entity based in the foreign UPE's jurisdiction or a local designated entity).
• Notification must occur no later than 6 months before the GIR due date.

03 GloBE Information Return (GIR) filing

• The South African subsidiary must submit or participate in the filing of the GIR (through the designated entity) in South Africa if:
  • the GIR is not being filed in the UPE's jurisdiction under a qualified competent authority agreement; or
  • the South African entity is the designated local filing entity for the group.
• Timing is generally 15 months after fiscal year end (or 18 months for the transitional year).

04 Intra-group communication

• The South African subsidiary must work with the UPE / designated filing entity to supply information required for the GIR, including jurisdictional ETR calculations and constituent entity data.
• Although South African tax may not be topped up locally if South Africa's effectivetax is above 15% (due to the 27% corporate rate), the subsidiary still must comply with reporting requirements.

05 Penalties and administrative compliance

Non-compliance with registration, notification, or filing deadlines may attract penalties (e.g. fines for late or missing returns under local legislation).

Safe Harbours

South Africa's GMT legislation incorporates the OECD Pillar Two safe harbour mechanisms, which may significantly reduce compliance and calculation burdens for qualifying MNE groups.

Safe harbours do not remove registration or notification obligations, but they may eliminate or simplify the detailed top-up tax calculation for a jurisdiction. There are two types of safe harbour mechanisms adopted:

• The Transitional CbCR Safe Harbour - a short-term measure that would effectively exclude an MNE's operations in certain lower-risk jurisdictions from the scope of GloBE in the initial years, thereby providing relief to MNEs in respect of their GloBE compliance obligations as they implement the rules.
• The Permanent Safe Harbour that would reduce the number of computations and adjustments an MNE is required to make under the GloBE Rules or allow the MNE to undertake alternative calculations to demonstrate that no GloBE tax liability arises with respect to a jurisdiction.

Deadlines for calendar fiscal years

Notification submission

• Each DCE must submit a notification to SARS no later than six months before the GIR filing due date.
• Since the GIR due date is:
  
  • 18 months after the end of the first reportable fiscal year (e.g., 2024 or the first year in scope), it is effectively due 12 months after year-end (for the first year)
  • 15 months after the end of subsequent fiscal years, the notification deadline is effectively 9 months after year-end (for subsequent years).
• Where a Designated Local Entity (DLE) is appointed to
  file the GIR on behalf of multiple DCEs:
  
  • Each DCE must notify SARS of the identity of that DLE.

GIR submission

• First reportable fiscal year:
  GIR must be filed within 18 months after year-end.
• Second and subsequent fiscal years:
  GIR must be filed within 15 months after year-end.
• If an MNE only becomes liable to top-up tax after 2024, it still benefits from:
  
  • 18 months to file the GIR for its first reportable year, and
  • 15 months for each year thereafter.

Transitional extensions granted by SARS SARS has provided the following blanket extensions:

• Notifications due before 30 April 2026 → extended to 30 April 2026.
• GIRs due before 30 June 2026 → extended to 30 June 2026.

The SARS External Business Requirement Specification on GMT provides the following GMT information/notification scenarios:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.