Abstract
African countries lose revenue to developed economies due to tax structuring
techniques deployed by multinational enterprises (multinationals). These
multinationals ensure that their profits, although generated in African economies, are
taxed in other jurisdictions, which often impose little or no tax. Despite the existing
international tax rules that are aimed at curbing base erosion and profit shifting
(BEPS), it is still possible for multinationals to shift profits from high-tax to low-tax
jurisdictions. To address this challenge, 137 countries committed, through the
Organisation for Economic Co-operation and Development (OECD) Inclusive
Framework, to work towards a common solution to addressing the BEPS challenge.
The solution envisaged by the Inclusive Framework of the OECD includes global
minimum tax rules that are aimed at imposing a global minimum tax of 15% in respect
of profits derived by multinationals in any country in which a multinational conducts
business operations. This study reviews and analyses South Africa’s anti-avoidance
tax rules and reflects on why BEPS remains a challenge in South Africa despite the
existence of these rules. Furthermore, the study conceptualises the proposed global
minimum tax rules and considers how the enactment of these rules might assist South
Africa in addressing the BEPS challenge. The study is based on a literature review of
qualitative data such as articles published by the OECD, the African Tax
Administration Forum, and various organisations and academics that have expressed
different views on this subject. The study concludes by outlining the potential benefits
that South Africa could derive from the enactment of the global minimum tax rules.