This research report comprehensively explores the tax treatment of interest in South Africa, assessing its nuances and complexities from multiple perspectives. The study begins by defining interest within various contexts, then examines interest as a tax-deductible expenditure under South African law, supported by key court cases. The investigation extends to the practical implications of interest taxation, focusing on the nature and purpose of the loan and its relation to income production. Furthermore, the report delves into the insights from classical economists and their relevance to contemporary tax laws, specifically critiquing the South African Supreme Court of Appeal's decision in the Brummeria case. The report concludes with an exploration of international tax standards regarding interest, emphasizing the need for harmonious interplay between domestic tax laws and international tax treaties
