Tax Planning
Optimizing Global Minimum Tax (Pillar Two) for Multinationals Operating in South Africa
Understanding how recent SARS notices affect Global Minimum Tax (GMT) calculations and interest methods offers multinationals clarity and opportunities for tax planning.
By NomadicTax Research Team • 5-8 min read • August 15, 2026
## What is the Global Minimum Tax (GMT) under Pillar Two
The Global Minimum Tax (GMT) rules, also known as the GloBE Model Rules, require multinational enterprise (MNE) groups to pay a **top-up tax** if their effective tax rate in a foreign jurisdiction falls below a minimum threshold (commonly 15%). South Africa has enacted legislation to comply with Pillar Two and now requires entities to file GMT returns and compute interest on GMT liabilities. ([sars.gov.za](https://www.sars.gov.za/latest-news/legal-counsel-secondary-legislation-public-notices-13/?utm_source=openai))
## Latest SARS Policy on GMT Interest Calculations
In **Notice 7645**, published in Government Gazette 54921 on **30 June 2026** and effective **1 July 2026**, SARS prescribes the method of calculating interest under section 7 of the Global Minimum Tax Act, 2024, read with Chapter 12 of the Tax Administration Act, 2011. This determines the date from which interest begins accruing on underpaid top-up tax. ([sars.gov.za](https://www.sars.gov.za/latest-news/legal-counsel-secondary-legislation-public-notices-13/?utm_source=openai))
### Implications:
- MNEs with underpaid GMT obligations need to compute interest precisely from the prescribed date. Small errors in determining effective tax rates or reporting periods can lead to penalties.
- The interest method may differ from other tax types; businesses need to ensure models incorporate GMT interest separately.
- Firms with operations in jurisdictions with low tax rates must closely monitor their ETRs to anticipate top-up tax obligations and cash flows.
## How to Plan Effectively: Action Steps for MNEs in Africa and South Africa
1. **Review fiscal years starting on or after 1 January 2024** to assess whether you are liable to file GMT returns, as these are the initial fiscal years in scope. SARS requires submission and payment **15 months after your fiscal year‐end**, or **18 months** under specified transitional arrangements. ([sars.gov.za](https://www.sars.gov.za/businesses-and-employers/government/quick-reference-to-government-connect-articles/?utm_source=openai))
2. **Ensure accurate data collection**: third-party data from local entities, tax credits, and treaty-based relief must be documented and auditable since interest obligations depend on transparency.
3. **Evaluate existing contracts and cross-border transactions** to identify low taxed income pockets that may trigger top-up tax or interest. Consider restructuring or redistributing income among entities if legally permissible.
4. **Incorporate GMT interest into tax forecasting**: align accounting and cash-flow projections with potential liabilities—including interest from prescribed dates.
## Examples
- A parent company with a subsidiary in Country X has a statutory tax rate of 12%. Without top-up arrangements, GMT will be due under South Africa’s rules. Interest begins accruing **1 July 2026**, per SARS Notice 7645.
- Entities in South Africa must integrate GMT interest into deferred tax accounting if fiscal year ends in December 2024—because their GMT liability will be computed and interest applied retroactively via the effective interest date.
## Conclusion: Why Businesses Should Act Now
With the effective date already passed, obligations triggered by Notice 7645 are in force. Multinationals should adjust their compliance systems urgently—aligning reporting, interest calculations, and financial forecasting to mitigate surprises and optimize tax positions. Leveraging advisory expertise can help avoid miscalculations and legal exposure.