Why the Global Minimum Tax Act Might Not Be Relevant to You (Yet)

The introduction of the Global Minimum Tax Act (GMT Act) into South African law on 24 December 2024 has created significant buzz in the tax world. The GMT Act is designed to ensure large multinational enterprise’s (MNEs) pay a minimum level of effective corporate tax rate in each jurisdiction they operate, aligning South Africa with international efforts to combat tax base erosion.

This development follows the formalisation of South Africa’s collaboration with the OECD on 16 July 2023, when both parties signed a Memorandum of Understanding for their inaugural Joint Work Programme. This five-year initiative is set to deepen OECD-South Africa cooperation, laying the groundwork for enhanced alignment on global tax policies.

Developed under the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting (BEPS), the GMT Act reflects the principles of the Pillar 2 proposals by setting an effective minimum tax rate of 15% for MNE Groups with annual revenues of at least €750 million. South Africa’s adoption of this framework underscores its role as an active participant in shaping equitable international tax standards.

Who Doesn’t Need to Worry About the Global Minimum Tax Act?

Multinationals with a South African presence have been preparing for worldwide changes as well as the South African impact of the GMT Act, with discussions largely focused on compliance, international competitiveness, and economic impacts. However, for many businesses and individuals, this legislation may not be as relevant as it seems - at least for now.

While the GMT Act aims to curb profit shifting to low-tax jurisdictions and erosion of the tax base by ensuring a fair share of taxes are paid by, the Act specifically targets MNEs with annual revenues of at least €750 million. This means that unless your business operates on a global scale and meets the revenue threshold, the GMT Act likely does not directly affect you.

In addition to the group annual revenue threshold, here’s a list of those who don’t need to lose sleep over the GMT Act:

Read more on our most recent article "Why the Global Minimum Tax Act Might Not Be Relevant to You (Yet)".