Global Minimum Tax

Background

The Pillar Two Model Rules (also referred to as the “Global Anti-Base Erosion” or “GloBE” Rules), released on 20 December 2021, are part of the Two-Pillar Solution to address the tax challenges of the digitalisation of the economy that was agreed by 137 member jurisdictions of the OECD/G20 Inclusive Framework on BEPS and endorsed by the G20 Finance Ministers and Leaders in October 2021. They were developed by delegates from all Inclusive Framework member jurisdictions and agreed and approved by consensus.

Digitalisation and globalisation have had a profound impact on economies and the lives of people around the world, and this impact has only accelerated in the 21st century. These changes have brought with them challenges to the rules for taxing international business income, which have prevailed for more than a hundred years and created opportunities for base erosion and profit shifting (BEPS). The GloBE Model Rules are designed to ensure large multinational enterprises (MNEs) pay a minimum level of tax on the income arising in each jurisdiction where they operate and establish a global minimum tax framework for these MNEs, ensuring that such groups pay a minimum tax of 15% on their income in every jurisdiction where they operate. 

Scope

The Global Minimum Tax framework applies to large multinational enterprise (MNE) groups that meet specific criteria. Entities are in scope if they belong to a group with global consolidated turnover exceeding €750 million in at least two of the tax years immediately preceding the reporting fiscal year. This includes both publicly traded and privately held companies (as well as any subsidiaries, branches, or permanent establishments that form part of the consolidated group), a domestic joint venture and a domestic joint venture subsidiary of a domestic joint venture group. The rules are designed to capture MNEs with substantial international operations, regardless of the industry sector or the countries in which they are headquartered or operate.

Entities that fall below the €750 million turnover threshold, or those that do not form part of a consolidated group, are generally excluded from the scope of the Global Minimum Tax. In addition, the following entities are not in scope:

• Governmental Entity;
• International Organisation;
• a Non-profit Organisation;
• Pension Fund;
• Investment Fund that is an Ultimate Parent Entity; or
• Real Estate Investment Vehicle.

Global Minimum Tax Legislation

South Africa enacted the GloBE minimum tax (GMT) legislation:

• Global Minimum Tax Act, 2024 (GMTA) enacted on 24 December 2024, and
• Global Minimum Tax Administration Act, 2024 (GMTAA) enacted on 9 January 2025.

These Acts came into operation on 1 January 2024 and apply to fiscal years beginning on or after that date. South Africa has adopted the OECD GloBE rules by reference using the ambulatory approach, thus ensuring that its GMT legislation automatically incorporates any future updates or amendments made to the OECD GloBE Model Rules without the need for further legislative changes, within certain criteria.

Charging mechanisms & rule order

• Income Inclusion Rule (IIR): Imposes a top-up tax on South African tax resident MNE groups with foreign subsidiaries where the effective tax rate is below 15% in respect of each reporting fiscal year (i.e. the accounting period with respect to which the ultimate parent entity of an MNE group prepares its consolidated financial statements).
• Specific articles of the GloBE Model Rules, such as the Under-Tax Payments Rule (UTPR) charging provisions, are not applicable under South African law.
• Domestic Minimum Top-up Tax (DMTT): Applies to low-taxed profits of foreign inbound MNEs with constituent entities in South Africa in respect of each reporting fiscal year. domestic constituent entities, joint ventures and joint venture subsidiary are jointly and severally liable for DMTT, which is calculated for all domestic constituent entities of the MNE Group, following the GloBE Model Rules with local modifications.

Under the GloBE Model Rules, a liability for top-up tax for a member of an in-scope MNE Group arises under three types of provisions: the QDMTT, the IIR and the UTPR. The rule order is:

• The low-taxed jurisdiction has the primary right to collect top-up tax under the QDMTT.
• If the low-taxed jurisdiction does not have a QDMTT then the jurisdiction where the UPE is located can apply the IIR in respect of the income of the low-taxed Constituent Entity.
• If the UPE is located in a jurisdiction that has not implemented a Qualified IIR, then the top-up tax will be levied on the next entity in the ownership chain that is located in a jurisdiction with an IIR following a top-down approach (i.e. intermediate parent entity (IPE)).

Where a Qualified IIR does not apply, the top-up tax is collected by the jurisdictions that have implemented a UTPR.

Compliance requirements

Registration

• An in-scope MNE must apply for registration to SARS in the prescribed form and format by the prescribed due date. 

Notification submission

• The DCEs must submit the GIR no later than six months prior to the filing due date of the GIR. This due date is 15 or 18 months after the end of the reportable fiscal year for which the GIR must be filed (for the 2024 fiscal year or the first fiscal year that the GIR must be filed by a DCE, this period is 18 months).
• Where a “designated local entity” is appointed by one or more DCEs required to file a GIR, each of the DCEs that appointed the designated local entity must notify SARS of the identity of the designated local entity that will file on its behalf

GIR submission

• File the first GloBE Information Return (GIR) in the prescribed form and manner no later than eighteen months after the end of the first reportable fiscal year.
• The second and subsequent GIR should be submitted no later than fifteen months after the end of the second and following reportable fiscal years.
• If an MNE only becomes liable to top-up tax after the 2024 fiscal year, it also has 18 months to file the GIR in respect of its first reportable fiscal year and thereafter 15 months for subsequent fiscal years.

To Note:

In accordance with section 25(7) of the Tax Administration Act, 2011 (TAA), the following extension has been granted:

• Notifications that would be due before 30 April 2026, to 30 April 2026; and for GIRs that would be due before 30 June 2026, to 30 June 2026.

Implementation Timelines

Useful information

• External Business Requirement Specification

GMT Legislation in South Africa

• Global Minimum Tax Administration Act
• Global Minimum Tax Act

OECD GloBE Rules

• OECD Global Minimum Tax information

News

For the latest news see the Global Minimum Tax Publications webpage.

Frequently Asked Questions

What is the Global Minimum Tax?

A tax regime ensuring large MNE group with global consolidated turnover exceeding €750 million in at least two of the tax years immediately preceding the reporting fiscal year, pay at least 15% tax in every jurisdiction where they operate.

Who is affected?

MNE Groups with entities or permanent establishments in more than one jurisdiction, such as a group of companies with Constituent Entities, a domestic joint venture and a domestic joint venture subsidiary of a domestic joint venture group located in South Africa.

How is the tax calculated?

Based on the GloBE Model Rules, with local modifications for South Africa as reflected in its GMT legislation.

How do you register for GMT?

The registration process will be conducted through the e-filing system, which is scheduled to become accessible from March 2026.

Are there any actions that the DCE is required to take before 16 March 2026?

No formal submissions are required before go‑live; SARS will issue guidance as the date approaches.

Is it necessary to register all DCEs in South Africa, or is it acceptable to nominate a single entity to register on behalf of the other DCEs?

Each DCE will need to register individually for purposes of its the GloBE top-up tax liability under the GMTA to obtain its respective and unique GMT tax reference number.

Does SARS require a formal election to appoint a Designated Local Entity (DLE)?

The DCE will notify SARS by submitting the DLE information during the e-Filing registration/notification process; no separate pre‑go‑live election letter is required.

If the GIR is filed in a jurisdiction with a Qualifying Competent Authority Agreement with South Africa, must the Domestic Constituent Entity still register with SARS?

The DCE is still required to register in South African in order to notify SARS of the identity of the designated filing entity located in the other jurisdiction that will file on its behalf, so as to enable SARS to ensure the GIR is exchanged with South Africa

Need help?

For GIR submission or schema related queries contact our GloBE support team at: [email protected]

For all other GloBE related queries please contact our GloBE support Team at [email protected]

We appreciate your continued support and cooperation as we move forward with this important initiative.