Accountancy in South Africa

>> Withholding Taxes in South Africa

Interest

South African source interest, which is received by / or accrued to a non-resident is exempt from tax. The exemption does not apply:

  • If the person is a natural person who was physically present in South Africa for a period exceeding 183 days in aggregate during the 12-month period preceding the date on which the interest is received by/or accrued to, that person;
  • Or the person is a natural person, or a legal person, who or which, at any time during the 12-month period preceding the date on which the interest is received or accrued, carried on business through a permanent establishment in South Africa, and the interest is received on or after 1 January 2015.

From 1 March 2015 a withholding tax is levied, calculated at a rate of 15% of the amount of any interest that is paid by any person, to or for the benefit of any foreign person, to the extent that the amount is regarded as having been received or accrued from a source within South Africa. The interest is deemed to be paid on the earlier of the date on which the interest is paid or becomes due and payable.

The withholding tax is a final tax.

Interest received by/or accruing to a non-resident will be exempt from the withholding tax if the interest is paid by:

  • The government of South Africa in the national, provincial or local sphere;
  • Any bank, the South African Reserve

Bank, the Development Bank of

Southern Africa or the Industrial

Development Corporation; or

  • A headquarter company in respect of it granting financial assistance to which the transfer pricing rules do not apply.

The interest will also be exempt from  the withholding tax if it is paid in respect  of any:

  • Listed debt instrument; or
  • Interest payable as contemplated in section 21(6) of the Financial Markets Act to any foreign person that is a client as defined.

Royalties

A withholding tax is levied, calculated at a rate of 15% of the amount of any royalty that is paid by any person to or for the benefit of any foreign person, to the extent that the amount is regarded as having been received or accrued from a source within South Africa.

A royalty is deemed to be paid on the earlier of the date on which the royalty is paid or becomes due and payable.

The withholding tax on royalties is a final tax.

Dividends

Dividends paid to non-residents are subject to a final withholding tax of 20%.  That rate of tax may be altered by the provisions of an agreement for the avoidance of double taxation in place between South Africa and the other country.


Latest version updated 15th March 2018

Country Breakdown

55.91

Million

Population

R

South African Rand

Currency

$ 294.8

Billion

GDP

1.22

Million

km2