South Africa is in line to rake in billions in tax revenue from big multinational companies. This comes after a ground-breaking agreement reached by G7 Finance Ministers in London last week.
The agreement on global tax reform, reached by Finance Ministers from the United States of America, Canada, the United Kingdom, France, Germany, Italy and Japan is aimed at making multi-national companies such as Google and Facebook, pay their fair share of taxes in countries where they generate their huge profits.
It’s been hailed as the biggest shake-up of the global tax system in the past century.
Video: SABC speaks to tax expert, Alex Gwala, from Deloitte SA
Under the G7 agreement, multi-national companies will from now on, be required to pay a minimum tax rate of 15% in countries where they operate.
South Africa already has a 28% corporate tax rate which all companies operating in the country are subjected to. But analysts say the G7 agreement will still have an indirect benefit for the country.
Experts say SARS stands to collect tens of billions of rands in additional tax revenue, if and when the G7 agreement comes to fruition.
The G7 agreement will now be referred to the G20 Heads of State Summit for final ratification later this year.