10, 16 & 18 Fricker Road,
15th Floor, Convention Tower,
Cape Town, 8001
Do tax authorities assess taxes, duties, or other impositions in connection with any of the following events and, if so, at what rates and under what circumstances?
Sales Tax (Value-Added Tax)
Sales of Aircraft and lease rentals
The importation of aircraft into South Africa attracts Value-Added Tax (“VAT”) at the effective rate of 15.4%. If the aircraft is imported into South Africa and will be leased here, the value of the lease rentals will be deemed to be the value of the aircraft for the purposes of calculating VAT.
The lease of an aircraft by a non-resident entity to a South African entity may create a liability on the non-resident to register as a VAT vendor in South Africa. However, the non-resident may apply for an exemption to register.
The supply (sale) of an aircraft in South Africa for export may be zero rated for VAT purposes, subject to compliance with certain documentary requirements. If these requirements are not met the sale will be subject to VAT at 14%. However, the non-resident is, in certain circumstances, able to claim a VAT refund.
Generally – No
Finance (mortgage tax, promissory note tax, conditional sale tax, tax on loan payments, tax on interest)
Mortgage tax – No
Promissory note – No
Conditional Sales tax – No
Taxes of loan payments and taxes on interest –
Interest received on loans, and income received from lease rentals will be subject to income tax, to the extent that the recipient is subject to income tax in South Africa.
Non-residents companies are only taxed on South African sourced income, at the rate of 33% (subject to the provisions of any Double Taxation Agreement (“DTA”), the majority of which further restrict South African tax to income attributable to a permanent establishment in South Africa. Companies resident in South Africa will be subject to income tax at a rate of 28%.
From 1 January 2013, interest payable by a South African resident company to a non-resident company will be subject to interest withholding tax at the maximum rate of 15%. However, this rate may be reduced in terms of a DTA.
Income tax – as discussed above. Lease rentals for aircraft used in South Africa would ordinarily be of a South African source, for income tax purposes.
The sale of an aircraft may be subject to capital gains tax, at the effective rate of 18.5% for residents, and 21.8% for non-residents subject to DTA relief. Any tax allowances previously claimed in South Africa would also be subject to taxable recoupment.
As stated above, with effect from 1 January 2013, interest payable by a South African resident company to a non-resident company is subject to interest withholding tax at the maximum rate of 15%.
No other withholding taxes will apply.
None other than VAT on importation as discussed above.
No, but may be subject to VAT at 14%.
FOR FURTHER INFORMATION: Please contact us and we would be pleased to assist.
DISCLAIMER: The above information should not be relied upon by the reader for legal advice as it is intended merely to serve as preliminary guide to the laws and regulations governing the taxation of aviation and aircraft in South Africa. The information intends to provide summary-level information about certain tax issues affecting general aviation and aircraft finance. Since these materials are general in nature, readers are encouraged to obtain legal and tax advice from their own professional legal and tax counsel based on specific facts and circumstances regarding their acquisition and/or use of aviation and aircraft.