Secondary Tax on Companies
What is Secondary Tax on Companies (STC)?
STC is asecond-stage tax levied on the after-tax profits of a company on dividends declared by a company to its shareholders
STC is governed by sections 64B and 64C of the Income Tax Act, 1962. Section 64B deals with the levy and recovery of STC, and section 64C contains the anti-avoidance provisions which deem certain amounts to be dividends declared by a company to its shareholders.
See the Comprehensive Guide to Secondary Tax on Companies (Issue 3) for more detail.
STC was payable by South African resident companies at a rate of 10% on dividends declared on or before 31 March 2012 STC was replaced with dividends tax on 1 April 2012 and is levied at a rate of 15% on dividends paid by a company. The STC credits of a company can be used until 31 March 2015 to ensure that the after-tax profits of a company that were distributed to shareholders and that were subject to STC are not also subject to dividends tax when on-distributed to shareholders.