The G-20 summit has paved the way for businesses to be bound to their countries, avoiding tax evasion and promoting each country’s economy and tax revenue.  

South Africa is amongst the 16 countries which have agreed to the global corporate minimum tax.  

Global corporate minimum tax is a tax regime established by international agreement whereby countries adhering to the agreement would impose a specific minimum tax rate on the income of corporations subject to the respective jurisdictions’ tax laws. The G-20 countries agreed on a 15% global corporate minimum tax, except four of the countries.  

What it means for the world economy  

Although this will mean an increase in corporate tax for other countries, it will benefit the majority. It is said that this new law will bring an estimated $150 billion in additional annual global tax revenues. Which will translate into each country having an increased revenue that will also contribute to solving fiscal imbalance. Additionally, the law will eliminate tax competition in countries. Businesses will have nowhere to run to in avoidance of high tax rates.  

Another benefit would be to minimise profit shifting, this is when businesses have their headquarters in one country while doing business in another, as a result, the business is eligible to pay tax where business takes place in avoidance of high tax rates from their headquarter location or country.  

South African accountants  

South Africa is the heart of global businesses. Many countries invest and start companies here, all these companies will be liable for tax if they were not paying already. This calls for more jobs and well-experienced tax professionals.  

For accounting and finance professionals, this is good news. Most businesses will then require tax services among others from local businesses. This will see a great need for qualified tax practitioners and accountants to properly handle their taxes and make sure that they adhere to all tax regulations and laws. Businesses will also see the need to move to their countries and be provided with services from there.  

As the need for tax services may come to a rise as the global minimum tax is applied in 2023, accounting professionals will need to get licensed and upskill themselves to put up to the challenge of tax services for both local and international companies to ensure professional and high-class services to their clients.