Feb 20, 2013 Comments Off on Five years of uncertainty around dividends withholding tax laid to rest
Five years of uncertainty and discussion around the introduction of dividends withholding tax have at last been laid to rest, says Deloitte.
Legislation that took effect on 01 April 2012 specifies a dividend withholding tax (DWT) rate of 15%, which is, however, subject to applicable domestic exemptions or tax treaties,” says Musa Manyathi, Associate Director in Taxation Services at Deloitte.
“The introduction of DWT marked the end of Secondary Tax on Companies (“STC”), which, until now, had been part of our tax regime for nearly 20 years – although it had never quite been understood by our major international trading partners. This ultimately was the fatal blow delivered to its existence.”
“DWT as an alternative tax ensures South Africa’s alignment with the international trend on the taxation of dividends. It therefore encourages much-needed foreign investment, and should have the benefit of compensating the fiscus for revenues lost as a result of the abolition of STC.”
“Whilst STC was a tax borne by the company declaring the dividend, DWT, in line with the rest of the world, is borne by the shareholder provided that the dividend is a cash dividend,” says Manyathi. “Although the DWT legislation is only eight months old, it has already undergone significant changes,” notes Manyathi.
Download the full article . . . . Five years of uncertainty around dividends withholding tax has been laid to rest
For a more detailed discussion around dividends withholding tax, contact Musa Manyathi (Associate Director in Deloitte Taxation Services) at email@example.com
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